IMF Staff Country Reports

The 2023 Article IV Consultation highlights that Malaysia’s growth momentum has slowed but remains resilient to external headwinds. While monetary policy has paused its tightening cycle, fiscal policy is consolidating, and the ringgit had been under pressure through most of 2023. The government’s commitment to the reform priorities outlined in its national strategic plans is yet to fully materialize, with the economy’s path to high-income status being uncertain. In view of the lower yet solid growth, positive projected output gaps, limited fiscal buffers, and ongoing energy price liberalization, near-term macro policies should focus on maintaining an overall tight policy stance to safeguard price stability, while rebuilding buffers and continuing targeted support to lower-income segments. Structural reforms would support medium-term growth. The government faces the challenging task of implementing its well-crafted and concerted policy frameworks, which are appropriately focused on improving labor market outcomes and increasing incomes, addressing climate change, promoting digitalization, and enhancing governance.