## IMF Staff Completes the 2024 Article IV Mission to Malaysia

_IMF News, December 15, 2023_

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**Canonical URL:** [IMF Staff Completes the 2024 Article IV Mission to Malaysia](https://www.imf.org/en/news/articles/2023/12/14/pr23448-malaysia-imf-staff-completes-2024-article-iv-mission)

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## Bibliographic details
- Published: December 15, 2023

---

### Mission overview
- An IMF team, led by Mr. Lamin Leigh, conducted discussions for the 2024 Article IV Consultation with the Malaysian authorities and other stakeholders during December 5-14, 2023.
- Press Release No. 23/448.
- End-of-Mission press releases convey preliminary findings of IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Staff will prepare a report for the IMF's Executive Board based on these findings.

### Economic outlook and growth projections
- The Malaysian economy "has weathered external headwinds well" with growth drivers shifting to robust domestic demand.
- Growth projections:
  - 2023: projected to grow at 4 percent.
  - 2024: projected to pick up slightly to 4.3 percent, supported by resilient private consumption and investment and a rebound in public spending.
- Private consumption remained the main driver of growth throughout 2023, supported by a healthy labor market.
- Exports to major trading partners weakened markedly due to subdued external demand and the economic slowdown in China.

### Inflation and inflation expectations
- Headline and core inflation have been moderating; core inflation has moderated more gradually.
- Inflation projections:
  - Headline inflation projected at 2.9 percent in 2023.
  - Inflation projected to moderate further to 2.7 percent in 2024.
- Inflation expectations remained well anchored.
- Uncertainties around the inflation outlook remain, including on account of subsidy reform.

### Fiscal policy assessment and recommendations
- A fiscal consolidation path, as set out in the 2024 Budget, would:
  - rebuild buffers,
  - put debt on a downward path,
  - reduce fiscal risks.
- Fiscal consolidation should be credibly underpinned by high-quality and durable revenue measures.
- Chief among recommended revenue measures: implementing a carefully designed consumption tax to:
  - create space for critical investment needs,
  - enable targeted transfers to low-income households,
  - buttress market confidence in Malaysia’s strong fundamentals.
- The authorities’ commitments noted as welcome include:
  - the historic tabling of the Fiscal Responsibility Act,
  - the ongoing subsidy reform,
  - progress on developing a medium-term revenue strategy.

### Monetary policy and financial stability
- Current stance: broadly neutral monetary policy stance remains appropriate at present.
- Recommendation: pursue a tightening bias in the near term in a data-dependent manner to keep inflation contained and expectations anchored.
- Rationale for tightening bias:
  - still higher than desirable core inflation,
  - ongoing, yet uncertain, subsidy reform.
- Additional measures:
  - enhanced monitoring of household and corporate balance sheets given high interest rates, weaker exchange rate, and lower growth.
  - continue exchange rate flexibility as the first line of defense against external shocks.

### Structural policies and medium-term strategy
- Implementation of the policy initiatives under the MADANI Economy framework, the mid-term review of the Twelfth Malaysia Plan, and accompanying national strategic plans should accelerate to:
  - support medium-term growth,
  - achieve high-income status.
- Policy priorities noted:
  - addressing climate change,
  - promoting digitalization,
  - enhancing governance and anti-corruption reforms.
- Additional priority reforms:
  - reforms that would meaningfully lift wages across skill levels,
  - reforms that ensure retirement income security.

### Closing remarks
- The IMF team thanked officials of the Government of Malaysia and Bank Negara Malaysia, other public institutions, and private sector representatives for productive discussions.

*Press Release No. 23/448 — IMF Communications Department, December 14, 2023.*

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## References

- [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/)
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_Source: https://www.imf.org/en/news/articles/2023/12/14/pr23448-malaysia-imf-staff-completes-2024-article-iv-mission_