Standard & Poor's cuts Malaysia GDP growth forecast as oil tumbles

[KUALA LUMPUR] Standard & Poor's said on Friday it had lowered its economic growth forecast for Malaysia to 4.6 per cent in 2015 and 5.0 per cent in 2016 as oil prices continue to slide.

The previous estimates were 5.5 per cent and 5.4 per cent, respectively.

The Southeast Asian country has been hard hit by the collapse in global crude prices. It is the world's second largest exporter of liquefied natural gas and is also a net oil exporter.

The government has relied on money from energy sales to spur economic growth and control its mounting debt.

"The steep drop in global oil prices, which we now expect to last at least through 2016, will likely hurt Malaysia's exports, reduce investment, and lower wealth and spending power," S&P's Asia-Pacific chief economist Paul Gruenwald said in a news release.

The rating agency had also revised its policy rate forecast for the Malaysian central bank, expecting the bank keeping the benchmark rate on hold at 3.25 per cent into 2016.

REUTERS