KUALA LUMPUR:  The International Monetary Fund (IMF) said on Tuesday, March 21 that following a robust recovery in 2022, Malaysia's Gross domestic product  (GDP) is expected to weaken in 2023 due to external headwinds, and inflation would remain high.

According to a statement from the International Monetary Fund, external challenges will cause Malaysia's GDP to decelerate to about 4.5 percent in 2023, a report read.

Moreover, Malaysia's inflation is expected to stay high at about 3.25 percent, with core inflation likely persisting amid a favourable production gap and signs of increasing demand-side pressures.

The International Monetary Fund claims that external factors, such as a sudden global recession and a greater-than-anticipated tightening of monetary policy by major central banks, are the main sources of downside risks.

Upon the reopening of the economy in April 2022, pent-up domestic demand and strong export performance, it stated, drove growth to 8.7%.

The construction, mining, and especially agriculture industries in Malaysia are still performing below pre-pandemic levels, said the IMF, who also emphasised that the recovery is still uneven.

It also stated that despite unprecedented spending on subsidies, Malaysia's headline inflation remained high for the majority of 2022, rising to 3.3% for the year rather than rising in lockstep with the world's food and commodity prices.

Nevertheless, it stated that Malaysia's inflation expectations were firmly grounded.

The plan is aptly focused on strengthening broad-based productivity drivers as well as inclusive growth, addressing climate change, promoting digitalization, enhancing governance, and strengthening anti-corruption reforms.

“The International Monetary Fund  team would like to thank the officials of the Government of Malaysia and Bank Negara Malaysia, other public institutions, as well as representatives from the private sector, and civil society for productive discussions.”

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