## IMF Executive Board Concludes 2024 Article IV Consultation with Malaysia

_IMF News, March 11, 2024_

## Source details

**Canonical URL:** [IMF Executive Board Concludes 2024 Article IV Consultation with Malaysia](https://www.imf.org/en/news/articles/2024/03/08/pr-2478-malaysia-imf-executive-board-concludes-2024-article-iv-consultation)

## Other formats

- [Markdown version](/en/news/articles/2024/03/08/pr-2478-malaysia-imf-executive-board-concludes-2024-article-iv-consultation/index.md)
- [Structured JSON version](/en/news/articles/2024/03/08/pr-2478-malaysia-imf-executive-board-concludes-2024-article-iv-consultation/index.json)
- [Bundle manifest](/en/news/articles/2024/03/08/pr-2478-malaysia-imf-executive-board-concludes-2024-article-iv-consultation/bundle-manifest.json)

## Bibliographic details
- Published: March 11, 2024

---

### Overview and near-term outlook
- Executive Board concluded the Article IV consultation on February 21, 2024.
- Growth momentum is slowing from a high base in 2022:
  - Advanced estimates: 3.4 percent growth for 2023Q4, down from 8.7 percent in 2022.
  - Growth is estimated at about 4 percent in 2023.
  - Growth projected to slightly accelerate to 4.3 percent in 2024, supported by resilient private consumption and investment and a rebound in public spending.
- Inflation and disinflation:
  - Average inflation fell to 2.5 percent in 2023, down from 3.4 percent in 2022.
  - Inflation projected to pick up to 2.9 percent in 2024, pending uncertainty around subsidy reform.
- Current account and external sector:
  - Over the medium term, the current account surplus is expected to widen as tourism recovers and improves the services balance.

### Macro policies and fiscal outlook
- Monetary policy:
  - 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.
  - OPR remained unchanged since May 2023; monetary policy stance currently broadly neutral.
- Fiscal policy and targets:
  - The 2023 Budget deficit target is expected to be met.
  - 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.
  - Directors welcomed enactment of the Public Finance and Fiscal Responsibility Act 2023 and planned fiscal consolidation.
  - Directors called for credible and durable revenue mobilization measures and spending prioritization.
  - Directors encouraged continuing subsidy reform and considering reintroducing the Goods and Services Tax to help finance pro-poor spending.

### Financial sector and macroprudential stance
- Financial soundness and stability:
  - Directors welcomed the financial sector’s soundness and the authorities’ commitment to safeguard financial stability.
  - Encouraged continued monitoring of highly leveraged households and small firms.
  - Welcomed updates to stress-test design to better capture emerging risks.
  - Encouraged considering expansion of the macroprudential toolkit in a preventive manner.
  - Welcomed strengthening of AML/CFT frameworks and called for continued efforts.

### Structural reforms and policy priorities
- Directors commended the authorities’ focused structural reform agenda and urged timely implementation.
- Recommended reform priorities:
  - Improve labor market outcomes and increase incomes to contribute to external rebalancing.
  - Promote the green transition and digitalization — including carefully leveraging the benefits of Artificial Intelligence.
  - Enhance governance and anti-corruption frameworks.
  - Preserve pension system sustainability; welcomed authorities’ initiatives on this front.

### Executive Board assessment — policy guidance
- Near-term focus:
  - Preserve price stability and rebuild buffers.
  - Rebuild fiscal buffers through consolidation and credible revenue measures.
- Monetary policy guidance:
  - Broadly neutral, data-dependent stance will help safeguard price stability.
  - Directors cautioned against prematurely cutting policy rates given upside risks to inflation.
  - Exchange rate flexibility and reserve adequacy should be preserved; welcomed measures to further develop FX markets.
- Structural and fiscal trade-offs:
  - Consider reintroducing the Goods and Services Tax to finance pro-poor spending while offsetting regressivity.
  - Prioritize spending and durable revenue mobilization to support consolidation and development/social needs.

### Key statistics and selected economic indicators (high-level)
- 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):
  - Machinery and Transport Equipment: 43.4 percent
  - Miscellaneous Manufactured Articles: 10.5 percent
  - Manufactured Goods: 8.9 percent

### Table 1 — Selected projected aggregates (extract)
- Real GDP (percent change):
  - 2020: -5.5
  - 2021: 3.3
  - 2022: 8.7
  - 2023: 4.0
  - 2024 (Proj.): 4.3
  - 2025 (Proj.): 4.4
- Private consumption (percent change):
  - 2020: -3.9
  - 2021: 1.9
  - 2022: 11.2
  - 2023: 7.5
  - 2024 (Proj.): 6.1
- Federal government overall balance (in percent of GDP):
  - 2020: -6.2
  - 2021: -6.4
  - 2022: -5.6
  - 2023: -5.0
  - 2024 (Proj.): -4.2
- Revenue (in percent of GDP):
  - 2020: 15.9
  - 2021: 15.1
  - 2022: 16.4
  - 2023: 14.9
  - 2024 (Proj.): 14.5
- Expenditure and net lending (in percent of GDP):
  - 2020: 22.0
  - 2021: 21.5
  - 2022: 20.9
  - 2023: 19.2
  - 2024 (Proj.): 18.8
- General government debt (in percent of GDP):
  - 2020: 67.7
  - 2021: 69.2
  - 2022: 65.6
  - 2023: 66.8
  - 2024 (Proj.): 66.6
- CPI inflation (annual average):
  - 2021: 2.5
  - 2022: 3.4
  - 2023: 2.5
  - 2024 (Proj.): 2.9
- Current account balance (in billions of U.S. dollars):
  - 2020: 12.5
  - 2021: 10.2
  - 2022: 12.2
  - 2023: 13.3
- Gross official reserves (US$ billions):
  - 2020: 107.6
  - 2021: 116.9
  - 2022: 114.7
  - 2023: 113.5
  - 2024 (Proj.): 120.4
  - 2025 (Proj.): 131.9
  - 2026 (Proj.): 142.6
- Total external debt (in billions of U.S. dollars):
  - 2020: 238.8
  - 2021: 258.7
  - 2022: 259.4
  - 2023: 279.9
  - 2024 (Proj.): 296.6
  - 2025 (Proj.): 318.0
  - 2026 (Proj.): 339.0
- Memorandum: Nominal GDP (in billions of ringgit):
  - 2020: 1,418
  - 2021: 1,549
  - 2022: 1,791
  - 2023: 1,910
  - 2024 (Proj.): 2,061
  - 2025 (Proj.): 2,215
  - 2026 (Proj.): 2,365

*Source: Press Release No. 24/78, IMF, March 10, 2024.*

---


## 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/)
- [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)

_Source: https://www.imf.org/en/news/articles/2024/03/08/pr-2478-malaysia-imf-executive-board-concludes-2024-article-iv-consultation_