IMF Forecasts An Increase In Malaysia’s 2024 Growth

The International Monetary Fund (IMF) expects Malaysia’s real gross domestic product (GDP) to grow to 4.3% in 2024, up from the 4% growth expected for 2023.

The IMF states that this predicted growth is mainly being driven by higher global export demand, particularly from the technology sector.

According to reporting by The Edge, Shanaka Peiris, IMF’s Asia Pacific regional studies division chief, had said that Malaysia is a very open economy, particularly in the export of electrical and electronics products.

Malaysia growth forecast at 4.3%

“We expect the global economy and export demand to gradually recover, particularly for the technology sector to pick up too, next year. With that, it will add to the 3% or higher growth we have in Malaysia towards next year,” he said at a press conference in conjunction with the release of the IMF Regional Economic Outlook (REO) for Asia and Pacific report.

With regards to Malaysia’s inflation, it was revealed that it had been gradually slowing. However, the recent subsidy reforms tabled during Budget 2024 could pose some risks. Regardless, Shanaka believes that said subsidy reforms are likely to be a “one-off”, thus not necessitating additional measures from Bank Negara Malaysia (BNM) for the moment.

“It will still depend on how the inflation comes around, the impact of subsidy reforms as well as the external environment and interest rate differentials (compared with US interest rates),” he said.

ASEAN region to see growth of 4.6% in 2024

Earlier, in a separate press briefing, IMF had forecast for the Asia and Pacific region to remains a relative bright spot.

“It is expected to grow by 4.6 percent in 2023 and by 4.2 percent in 2024, which puts it on track to contribute about two thirds of global growth this year,” said Krishna Srinivasan, IMF Director of the Asia and Pacific Department.

As for the outlook in the ASEAN region, IMF expected to see growth of 4.2 percent in 2023 and 4.6 percent in 2024. This is a downward revision of 0.4 percentage points in 2023 and 0.3 percentage points in 2024 relative to IMF’s World Economic Outlook earlier in April.

“The downgrade reflects not only weaker growth outturns, but external demand is also weakening and more lacklustre domestic demand because of waning revenge consumption and monetary policy tightening,” Krishna added.

He also highlighted that the region is facing challenges from persistent medium-term output losses and China’s structural slowdown, geoeconomic fragmentation, and inflation.