December 11, 2017
Real GDP growth has surprised on the upside and is projected at 5.5–6.0 percent for 2017, driven by domestic demand and robust exports, while inflation has increased on the back of higher oil prices and is projected at close to 4 percent.
", "publishDate": "2017-12-11", "sections": [ { "heading": "Growth and inflation: recent performance and 2017 outcomes", "content": "- Real GDP growth has surprised on the upside and is projected at 5.5–6.0 percent for 2017, driven by domestic demand and robust exports.\n- Real GDP growth grew at 5.9 percent year-over-year in the first three quarters of 2017.\n- Headline consumer price inflation has gone up on higher oil prices and is projected at close to 4 percent for 2017.\n- Core inflation and credit growth are contained.\n- On the external side, the current account balance surplus has increased, helped by strong exports." }, { "heading": "Outlook and risks (near term and 2018 projection)", "content": "- Real GDP growth is projected at 5.0–5.5 percent in 2018.\n- Headline inflation is expected to decline to the 3.0–3.5 percent range in 2018 on lower impact from global oil prices.\n- Near-term risks are described as balanced:\n - Upside: Strong global demand for electronics could last longer than anticipated, benefiting Malaysia’s exports.\n - Downside: Policy uncertainty in advanced economies and tighter global financial conditions.\n- Policy message: Striking the right balance in policies will be key." }, { "heading": "Fiscal policy guidance", "content": "- The government’s planned pace of fiscal consolidation for 2017–18 is appropriate and will help build buffers and maintain financial market confidence.\n- Medium-term recommendation:\n - Fiscal policy should follow a gradual consolidation path.\n - The composition of adjustment could be improved to make it more revenue based and to make room for structural reforms and increased social spending for inclusive growth.\n - Medium term fiscal targets should be better communicated.\n- Fiscal policy should prioritize adjustment through higher revenues, making room for increased pro-growth social spending." }, { "heading": "Monetary and external policy guidance", "content": "- The current accommodative monetary policy stance with a bias towards reduced accommodation is appropriate, given above–potential growth but still stable core inflation.\n- Authorities should stand ready to raise the policy rate should leading indicators suggest the emergence of overheating pressures.\n- Continued reliance on exchange rate flexibility and macroeconomic policy adjustments should be the first line of defense against capital flow shocks.\n- The authorities’ emphasis on consultation with market participants in developing onshore financial markets is welcome; continuous communication on initiatives to deepen these markets would help build confidence." }, { "heading": "Financial sector assessment", "content": "- The financial sector is resilient.\n- Bank profitability and liquidity are sound, and corporate access to credit remains healthy.\n- Housing price growth has moderated, but pockets of risks exist in exposures to household mortgages and the property development sector; their impact on macro-financial stability appears contained." }, { "heading": "Structural reform priorities", "content": "- The authorities’ comprehensive structural reform agenda, laid out in the 11th Malaysia plan, focuses on supporting higher productivity and improving labor market outcomes to boost medium-term growth and improve living standards.\n- Priority policy actions recommended:\n - Encourage female labor force participation.\n - Improve the quality of education and skills.\n - Improve vocational and technical training to reduce labor market skill mismatches.\n - Encourage R&D.\n - Update public infrastructure." }, { "heading": "Mission, consultations, and next steps", "content": "- An IMF team, led by Nada Choueiri, visited Kuala Lumpur and Putrajaya from November 28-December 8 2017 for the 2018 Article IV Consultation discussions.\n- The team exchanged views with senior officials of the Government of Malaysia and Bank Negara Malaysia (BNM), and met with representatives from the private sector and think tanks.\n- The mission will prepare a staff report and present it to the Executive Board of the IMF, currently expected in February 2018.\n\nIMF Communications Department — Press Release No. 17/478; December 11, 2017. Statement issued by Ms. Nada Choueiri at the conclusion of the mission.\n\n---\n\n\n References\n\n- Malaysia and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2017/12/11/pr17478-imf-staff-completes-2018-article-iv-visit-to-malaysia" } ], "bullets": [ "[Markdown version](/en/news/articles/2017/12/11/pr17478-imf-staff-completes-2018-article-iv-visit-to-malaysia/index.md)", "[Structured JSON version](/en/news/articles/2017/12/11/pr17478-imf-staff-completes-2018-article-iv-visit-to-malaysia/index.json)", "[Bundle manifest](/en/news/articles/2017/12/11/pr17478-imf-staff-completes-2018-article-iv-visit-to-malaysia/bundle-manifest.json)", "Published: December 11, 2017", "Real GDP growth has surprised on the upside and is projected at 5.5–6.0 percent for 2017, driven by domestic demand and robust exports.", "Real GDP growth grew at 5.9 percent year-over-year in the first three quarters of 2017.", "Headline consumer price inflation has gone up on higher oil prices and is projected at close to 4 percent for 2017.", "Core inflation and credit growth are contained.", "On the external side, the current account balance surplus has increased, helped by strong exports.", "Real GDP growth is projected at 5.0–5.5 percent in 2018.", "Headline inflation is expected to decline to the 3.0–3.5 percent range in 2018 on lower impact from global oil prices.", "Near-term risks are described as balanced:", "Policy message: Striking the right balance in policies will be key.", "The government’s planned pace of fiscal consolidation for 2017–18 is appropriate and will help build buffers and maintain financial market confidence.", "Medium-term recommendation:", "Fiscal policy should prioritize adjustment through higher revenues, making room for increased pro-growth social spending.", "The current accommodative monetary policy stance with a bias towards reduced accommodation is appropriate, given above–potential growth but still stable core inflation.", "Authorities should stand ready to raise the policy rate should leading indicators suggest the emergence of overheating pressures.", "Continued reliance on exchange rate flexibility and macroeconomic policy adjustments should be the first line of defense against capital flow shocks.", "The authorities’ emphasis on consultation with market participants in developing onshore financial markets is welcome; continuous communication on initiatives to deepen these markets would help build confidence.", "The financial sector is resilient.", "Bank profitability and liquidity are sound, and corporate access to credit remains healthy.", "Housing price growth has moderated, but pockets of risks exist in exposures to household mortgages and the property development sector; their impact on macro-financial stability appears contained.", "The authorities’ comprehensive structural reform agenda, laid out in the 11th Malaysia plan, focuses on supporting higher productivity and improving labor market outcomes to boost medium-term growth and improve living standards.", "Priority policy actions recommended:", "An IMF team, led by Nada Choueiri, visited Kuala Lumpur and Putrajaya from November 28-December 8 2017 for the 2018 Article IV Consultation discussions.", "The team exchanged views with senior officials of the Government of Malaysia and Bank Negara Malaysia (BNM), and met with representatives from the private sector and think tanks.", "The mission will prepare a staff report and present it to the Executive Board of the IMF, currently expected in February 2018.", "[Malaysia and the IMF](http://www.imf.org/external/country/MYS/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2017/12/11/pr17478-imf-staff-completes-2018-article-iv-visit-to-malaysia/index.md", "json": "/en/news/articles/2017/12/11/pr17478-imf-staff-completes-2018-article-iv-visit-to-malaysia/index.json", "bundleManifest": "/en/news/articles/2017/12/11/pr17478-imf-staff-completes-2018-article-iv-visit-to-malaysia/bundle-manifest.json" }, "generatedAtUtc": "2026-09-25T21:25:14.732Z" }