Many commodity- and oil-producing countries, notably in Latin America, have suffered badly through the decline in oil and other commodity prices since the beginning of 2014. But the Pacific region contains one country, Malaysia, where the economy has remained well balanced and growth has continued at a rapid pace.

Malaysia had one advantage over the likes of Greece: it could devalue. The ringgit has fallen 16% against the dollar in the past year, from 3.19 to the dollar to 3.81. That has kept it competitive with the 19% decline in the euro and the 18% decline in the yen, while allowing it a full 16% devaluation against the Chinese yuan and a 7% devaluation against the Singapore dollar and the Korean won, both of which have benefited from the commodity price decline. Even against the much poorer Indonesia, also commodity dependent, the ringgit has declined by 4%.

Its currency competitiveness has led Malaysia to export strength. A June 30 report by Fitch Ratings upgraded Malaysia’s credit outlook to “stable” on its A minus-rated debt. And it forecast that Malaysia would run a current account surplus of 1.4% of GDP in 2015, a highly satisfactory outlook, while the country’s exports are running slightly ahead of last year.

Part of that is diversification: 33% of Malaysia’s exports are electrical equipment, where it has become more competitive in the substantial Singapore and Chinese markets.

Malaysia’s fiscal position is less satisfactory, because oil represents a substantial share of state revenues. Its current deficit target is 3.2% of GDP, which Fitch expects to be hurt by a possible bailout of the troubled state investment company 1MDB. However the country is reforming its goods and services tax and has cut fuel subsidies, so Fitch believes the fiscal position is likely to improve next year. Fitch also points out that the country has an active domestic bond market, so given its balance of payments surplus a credit crunch is unlikely.

Malaysia cut its growth forecast for 2015 from 6% to 4.5%-5.5% early this year, after the oil price decline. In reality, growth seems to be coming in at the upper end of that range; first quarter GDP growth was 5.6%, while the Economist team of forecasters currently expects 5.5% growth in 2015 and 5.6% in 2016. With population growth moderate at 1.6% annually, that gives the country a 3.5% -4% annual increase in living standards.

What follows for subscribers is a discussion of our Malaysian holding.