Malaysia: 2016 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Malaysia
IMF Staff Country Reports, May 4, 2016
Source details
- Canonical URL
- Malaysia: 2016 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Malaysia
Other formats
Bibliographic details
- Published: May 4, 2016
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484343067.002
Executive summary and shocks
- Malaysian economy was hit by a number of external and domestic shocks since late 2014, including:
- sharply lower energy prices
- spillovers from China
- capital outflows
- domestic political controversies
- The 2016 budget, including January recalibration, reaffirms the government’s commitment to fiscal consolidation.
- Current accommodative monetary policy stance judged appropriate in an environment of moderating growth and low inflation.
- Facing sizeable capital outflows and a sharp fall in oil and commodity prices, the exchange rate depreciated substantially.
- The central bank deployed reserves; the effect on domestic interest rates was modest.
- Credit growth has moderated after several years of double-digit growth.
Macroeconomic policy assessment
- Fiscal policy:
- 2016 budget and January recalibration signal continued fiscal consolidation commitment.
- Monetary policy:
- Accommodative stance considered appropriate given moderating growth and low inflation.
- External policy response:
- Central bank intervention through reserve deployment to address exchange rate pressures.
Financial sector and credit
- Credit dynamics:
- Credit growth moderated, reversing several years of double-digit growth.
- Interest rates:
- Central bank actions had modest effects on domestic interest rates.
External sector and risks
- Exchange rate and reserves:
- Substantial exchange rate depreciation occurred amid sizeable capital outflows and sharp falls in oil and commodity prices.
- Central bank deployed reserves in response.
- External shocks:
- Continued vulnerability to commodity price swings and spillovers from major trading partners such as China.
Subjects and thematic coverage
- Anti-money laundering and combating the financing of terrorism (AML/CFT)
- Balance of payments
- Capital outflows
- Credit and money
- Exports and international trade
- External debt and loans
- Crime
Source: Malaysia: 2016 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Malaysia, May 4, 2016, International Monetary Fund.