{
  "title": "IMF Executive Board Concludes 2024 Article IV Consultation with Malaysia",
  "publication": "IMF News, March 11, 2024",
  "sourceUrl": "https://www.imf.org/en/news/articles/2024/03/08/pr-2478-malaysia-imf-executive-board-concludes-2024-article-iv-consultation",
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  "summary": "On February 21, 2024, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Malaysia.",
  "publishDate": "2024-03-11",
  "sections": [
    {
      "heading": "Overview and near-term outlook",
      "content": "- Executive Board concluded the Article IV consultation on February 21, 2024.\n- Growth momentum is slowing from a high base in 2022:\n  - Advanced estimates: 3.4 percent growth for 2023Q4, down from 8.7 percent in 2022.\n  - Growth is estimated at about 4 percent in 2023.\n  - Growth projected to slightly accelerate to 4.3 percent in 2024, supported by resilient private consumption and investment and a rebound in public spending.\n- Inflation and disinflation:\n  - Average inflation fell to 2.5 percent in 2023, down from 3.4 percent in 2022.\n  - Inflation projected to pick up to 2.9 percent in 2024, pending uncertainty around subsidy reform.\n- Current account and external sector:\n  - Over the medium term, the current account surplus is expected to widen as tourism recovers and improves the services balance."
    },
    {
      "heading": "Macro policies and fiscal outlook",
      "content": "- Monetary policy:\n  - Bank Negara Malaysia (BNM) increased the overnight policy rate (OPR) five times since May 2022 by a total of 125 bps to 3.0 percent.\n  - OPR remained unchanged since May 2023; monetary policy stance currently broadly neutral.\n- Fiscal policy and targets:\n  - The 2023 Budget deficit target is expected to be met.\n  - The 2024 Budget targets a decline in the overall deficit from 5 percent of GDP in 2023 to 4.3 percent in 2024, and down to less than 3 percent of GDP by 2026.\n  - Directors welcomed enactment of the Public Finance and Fiscal Responsibility Act 2023 and planned fiscal consolidation.\n  - Directors called for credible and durable revenue mobilization measures and spending prioritization.\n  - Directors encouraged continuing subsidy reform and considering reintroducing the Goods and Services Tax to help finance pro-poor spending."
    },
    {
      "heading": "Financial sector and macroprudential stance",
      "content": "- Financial soundness and stability:\n  - Directors welcomed the financial sector’s soundness and the authorities’ commitment to safeguard financial stability.\n  - Encouraged continued monitoring of highly leveraged households and small firms.\n  - Welcomed updates to stress-test design to better capture emerging risks.\n  - Encouraged considering expansion of the macroprudential toolkit in a preventive manner.\n  - Welcomed strengthening of AML/CFT frameworks and called for continued efforts."
    },
    {
      "heading": "Structural reforms and policy priorities",
      "content": "- Directors commended the authorities’ focused structural reform agenda and urged timely implementation.\n- Recommended reform priorities:\n  - Improve labor market outcomes and increase incomes to contribute to external rebalancing.\n  - Promote the green transition and digitalization — including carefully leveraging the benefits of Artificial Intelligence.\n  - Enhance governance and anti-corruption frameworks.\n  - Preserve pension system sustainability; welcomed authorities’ initiatives on this front."
    },
    {
      "heading": "Executive Board assessment — policy guidance",
      "content": "- Near-term focus:\n  - Preserve price stability and rebuild buffers.\n  - Rebuild fiscal buffers through consolidation and credible revenue measures.\n- Monetary policy guidance:\n  - Broadly neutral, data-dependent stance will help safeguard price stability.\n  - Directors cautioned against prematurely cutting policy rates given upside risks to inflation.\n  - Exchange rate flexibility and reserve adequacy should be preserved; welcomed measures to further develop FX markets.\n- Structural and fiscal trade-offs:\n  - Consider reintroducing the Goods and Services Tax to finance pro-poor spending while offsetting regressivity.\n  - Prioritize spending and durable revenue mobilization to support consolidation and development/social needs."
    },
    {
      "heading": "Key statistics and selected economic indicators (high-level)",
      "content": "- Nominal GDP (2022): US$407.0 billion\n- Population (2022): 32.7 million\n- GDP per capita (2022, current prices): US$12,466\n- Poverty rate (2019, national poverty line): 0.2 percent\n- Unemployment rate (2022, period average): 3.8 percent\n- Adult literacy rate (2019): 95.0 percent\n- Main domestic goods exports (share of total domestic exports, 2022):\n  - Machinery and Transport Equipment: 43.4 percent\n  - Miscellaneous Manufactured Articles: 10.5 percent\n  - Manufactured Goods: 8.9 percent"
    },
    {
      "heading": "Table 1 — Selected projected aggregates (extract)",
      "content": "- Real GDP (percent change):\n  - 2020: -5.5\n  - 2021: 3.3\n  - 2022: 8.7\n  - 2023: 4.0\n  - 2024 (Proj.): 4.3\n  - 2025 (Proj.): 4.4\n- Private consumption (percent change):\n  - 2020: -3.9\n  - 2021: 1.9\n  - 2022: 11.2\n  - 2023: 7.5\n  - 2024 (Proj.): 6.1\n- Federal government overall balance (in percent of GDP):\n  - 2020: -6.2\n  - 2021: -6.4\n  - 2022: -5.6\n  - 2023: -5.0\n  - 2024 (Proj.): -4.2\n- Revenue (in percent of GDP):\n  - 2020: 15.9\n  - 2021: 15.1\n  - 2022: 16.4\n  - 2023: 14.9\n  - 2024 (Proj.): 14.5\n- Expenditure and net lending (in percent of GDP):\n  - 2020: 22.0\n  - 2021: 21.5\n  - 2022: 20.9\n  - 2023: 19.2\n  - 2024 (Proj.): 18.8\n- General government debt (in percent of GDP):\n  - 2020: 67.7\n  - 2021: 69.2\n  - 2022: 65.6\n  - 2023: 66.8\n  - 2024 (Proj.): 66.6\n- CPI inflation (annual average):\n  - 2021: 2.5\n  - 2022: 3.4\n  - 2023: 2.5\n  - 2024 (Proj.): 2.9\n- Current account balance (in billions of U.S. dollars):\n  - 2020: 12.5\n  - 2021: 10.2\n  - 2022: 12.2\n  - 2023: 13.3\n- Gross official reserves (US$ billions):\n  - 2020: 107.6\n  - 2021: 116.9\n  - 2022: 114.7\n  - 2023: 113.5\n  - 2024 (Proj.): 120.4\n  - 2025 (Proj.): 131.9\n  - 2026 (Proj.): 142.6\n- Total external debt (in billions of U.S. dollars):\n  - 2020: 238.8\n  - 2021: 258.7\n  - 2022: 259.4\n  - 2023: 279.9\n  - 2024 (Proj.): 296.6\n  - 2025 (Proj.): 318.0\n  - 2026 (Proj.): 339.0\n- Memorandum: Nominal GDP (in billions of ringgit):\n  - 2020: 1,418\n  - 2021: 1,549\n  - 2022: 1,791\n  - 2023: 1,910\n  - 2024 (Proj.): 2,061\n  - 2025 (Proj.): 2,215\n  - 2026 (Proj.): 2,365\n\nSource: Press Release No. 24/78, IMF, March 10, 2024.\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- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2024/03/08/pr-2478-malaysia-imf-executive-board-concludes-2024-article-iv-consultation"
    }
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    "Published: March 11, 2024",
    "Executive Board concluded the Article IV consultation on February 21, 2024.",
    "Growth momentum is slowing from a high base in 2022:",
    "Inflation and disinflation:",
    "Current account and external sector:",
    "Monetary policy:",
    "Fiscal policy and targets:",
    "Financial soundness and stability:",
    "Directors commended the authorities’ focused structural reform agenda and urged timely implementation.",
    "Recommended reform priorities:",
    "Near-term focus:",
    "Monetary policy guidance:",
    "Structural and fiscal trade-offs:",
    "Nominal GDP (2022): US$407.0 billion",
    "Population (2022): 32.7 million",
    "GDP per capita (2022, current prices): US$12,466",
    "Poverty rate (2019, national poverty line): 0.2 percent",
    "Unemployment rate (2022, period average): 3.8 percent",
    "Adult literacy rate (2019): 95.0 percent",
    "Main domestic goods exports (share of total domestic exports, 2022):",
    "Real GDP (percent change):",
    "Private consumption (percent change):",
    "Federal government overall balance (in percent of GDP):",
    "Revenue (in percent of GDP):",
    "Expenditure and net lending (in percent of GDP):",
    "General government debt (in percent of GDP):",
    "CPI inflation (annual average):",
    "Current account balance (in billions of U.S. dollars):",
    "Gross official reserves (US$ billions):",
    "Total external debt (in billions of U.S. dollars):",
    "Memorandum: Nominal GDP (in billions of ringgit):",
    "[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/)",
    "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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