Despite Fitch upgrade, Malaysia still has a lot of hassles to resolve

THE heavy feeling in the air that has dogged Malaysia this year due to a confluence of internal and external factors was briefly supplanted by great relief on Wednesday when Fitch Ratings did not (as widely expected) downgrade the country's debt rating; instead, it upgraded its outlook from negative to stable.

Fitch cited improving fiscal finances and favourable growth rates for its decision to keep the country's rating at A minus and its upward revision of the country's outlook. Indeed, the economy has shown relative resilience despite the oil price slump; last year, GDP grew 6 per cent and over the next four years, the Organisation for Economic Co-operation and Development (OECD) predicts Malaysia will have an annual growth of 5.6 per cent.

Also, Kuala Lumpur has pushed ahead (and not backpedalled like in the past) with fiscal reforms such as a new consumption tax and fuel subsidy cuts to boost the coffers despite public criticism.