Moody's Investors Service has predicted that the change in Malaysia's government will not materially alter growth trends in the near term. 

In a report today, the rating agency said that the removal of the goods and services tax could boost private consumption in the short term.

"However, a review of large infrastructure projects could also result in any pick-up in investment being more spread out than Moody's had previously anticipated," said the agency. 

GDP growth has been on the downtrend from 6.98 percent in 2010 to 4.2 percent in 2016.

On the impact of Putrajaya's decision to remove the 6 percent GST, Moody's regarded this development as "credit negative" and will increase government reliance on oil-related revenue and narrows the tax base.

"Moody's estimates that revenue lost from the scrapped tax would measure around 1.1 percent of GDP this year - even with some offsets - and 1.7 percent beyond 2018; further straining Malaysia's fiscal strength," said the agency.

Moody's also anticipated that the reintroduction of targeted fuel subsidies as "credit negative" and would put a strain on the government's fiscal position while raising the government's exposure to oil price movements.