## Malaysia: 2023 Article IV Consultation-Press Release and Staff Report

_IMF Staff Country Reports, June 1, 2023_

## Source details

**Canonical URL:** [Malaysia: 2023 Article IV Consultation-Press Release and Staff Report](https://www.imf.org/en/publications/cr/issues/2023/05/31/malaysia-2023-article-iv-consultation-press-release-and-staff-report-533968)

## Other formats

- [Markdown version](/en/publications/cr/issues/2023/05/31/malaysia-2023-article-iv-consultation-press-release-and-staff-report-533968/index.md)
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## Bibliographic details
- Published: June 1, 2023
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400243820.002

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### Key findings
- Malaysia registered a strong economic recovery in 2022, backed by its well-diversified economy, sound policy frameworks, and commodity exporter status.
- Monetary policy started a gradual post-pandemic normalization in 2022.
- Record costly spending on fuel subsidies broadly kept inflationary pressures suppressed in 2022.
- The new national unity government has signaled its commitment to the reform priorities outlined in the Twelfth Malaysia Plan and the 2023 Budget to propel the economy toward net-zero greenhouse gas emissions and high-income status.
- There is a positive output gap and ongoing inflationary pressures that warrant policy attention.
- The financial sector remains healthy but warrants stepped-up monitoring, especially of highly leveraged entities and non-bank financial institutions, given increased risks from:
  - rising interest rates,
  - tighter financial conditions,
  - exchange rate depreciation,
  - weaker expected growth.

### Policy recommendations and near-term priorities
- Near-term policies should focus on accelerating the pace of policy tightening, while managing downside risks and trade-offs.
- Stepped-up monitoring of the financial sector, with particular attention to highly leveraged entities and non-bank financial institutions.
- Expand the macroprudential toolkit to support financial stability efforts.

### Thematic areas and risks
- Subject areas: External debt, Fiscal policy, Inflation, International organization, Monetary policy, Prices, Public debt, Revenue administration.
- Keywords highlighted in the report: asset forfeiture regime, balance of payments position, coverage ratio, Global, Inflation, inflation expectation, Malaysia's obligation, PPI weight.
- Key macro-financial risks: interaction of policy tightening with households and corporates, vulnerabilities in non-bank financial institutions, and external shocks affecting exchange rates and growth.

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## Content in this bundle

- **1mysea2023001**
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  - [1mysea2023001 (PDF)](/-/media/files/publications/cr/2023/english/1mysea2023001.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2023/05/31/malaysia-2023-article-iv-consultation-press-release-and-staff-report-533968_