IMF predicts Malaysia’s growth stability

02 Mar 2020

Malaysia’s growth is forecasted to stay strong and steady this year according to the International Monetary Fund (IMF). 

The economy will bounce back later on as the country’s state currently has higher inflation.

In a statement released last week, the IMF said, “Private investment will gradually pick up as the business environment continues to improve and external uncertainties dissipate.”

This prediction was made on the 7th of February, after the IMF executive board concluded the annual consultation with Malaysia.

It also said that inflation will grow by more than 2.0% along with domestic demand increases. 

The statement continued to say, “Over the medium term, growth should converge to potential (below 5.0 per cent) and inflation remains under control, while the current account surplus continues to moderate.” 

However, the fund also acknowledged that weaker-than-expected trading partners’ growth and Malaysia’s vulnerable position to trade actions may bring risks to growth. 

“An abrupt deterioration in market sentiment towards emerging markets could lead to tighter financial conditions. However, a durable truce that may follow the recent signature of the phase-one deal between the U.S. and China is an upside risk.”

The IMF added, “Directors welcomed the planned pace of fiscal consolidation and encouraged the authorities to identify well-defined spending and revenue measures to support this adjustment, including in the context of the upcoming medium-term revenue strategy preparation.”

“Directors advised the authorities to closely monitor risks in the real estate and household sectors. Further enhancing the macro-prudential toolkit would be helpful. Directors commended the ongoing efforts to strengthen financial literacy and manage cyber risks and climate change risks to the financial sector.”