Just a follow up from yesterday evening’s post. To refresh your memory, here’s the data I posted:
|GDP growth (2014e)||Gross Debt to GDP||Fiscal Balance||Current Account to GDP|
- Australia has low debt to GDP but runs a twin deficit;
- Canada has high debt to GDP and also runs a twin deficit;
- Malaysia has a middling debt to GDP and has a fiscal deficit, but runs a current account surplus
Here’s the sovereign credit ratings for all three by agency:
|Australia||AAA (Stable)||Aaa (Stable)||AAA (Stable)|
|Canada||AAA (Stable)||Aaa (Stable)||AAA (Stable)|
|Malaysia||A- (Stable)||A3 (Stable)||A- (Negative)|
As far as I can make out, Australia has fairly low contingent liabilities (less than 7% of GDP), while Canada (not including pension liabilities) is about 25% of GDP. Malaysia has about 15% (also not including pension liabilities). All three of course are primary commodity producers with government revenue either implicitly or explicitly reliant on taxes and duties on that sector.
So Fitch, dudes, what’s up with the negative outlook on Malaysia?
How come Mexico – with an economy 4 times as large but oil production 5 times as large, places 53 spots below Malaysia in terms of corruption and 36 spots below in terms of doing business, has both a current account and budget deficit, and has a debt level only a little lower than Malaysia – gets away with BBB+ (Stable)?
We’re as risky as Mexico, really?