Fitch: Concerns for Malaysia

Fitch Ratings said the substantial contribution of government spending to Malaysian economic growth in late 2011 suggests that fiscal expansion is already being deployed as a buffer against the effects of global economic weakness.

This is potentially a cause for concern given Malaysia's limited headroom for fiscal stimulus, the agency said.

Malaysian GDP grew 5.1% in 2011, the central bank recently said, in line with our full-year forecast, Fitch said.

A further global slowdown means the growth rate of Malaysia's trade-dependent economy will slow further this year, the agency said.

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