Malaysia: 2026 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Malaysia

The 2026 Article IV Consultation highlights that Malaysia’s economy has shown notable resilience against global trade tensions and policy uncertainty. The economy continued to grow healthily, estimated at 4.9 percent in 2025, supported by strong domestic demand and a global tech-sector upcycle. Fiscal consolidation has advanced under the Public Finance and Fiscal Responsibility Act. The authorities’ commitment to reducing the fiscal deficit to 3.0 percent of gross domestic product by 2028 is welcome. The current monetary policy stance is appropriate. Going forward, monetary policy should stay data-dependent to continue to anchor inflation expectations and preserve growth. Systemic financial sector risks remain contained, supported by banks’ ample capital and liquidity buffers, healthy household balance sheets, and a stable housing market. Continued vigilance is important against pockets of vulnerabilities, such as highly leveraged households. Swift implementation of structural reforms under the 13th Malaysia Plan (13MP) is a priority. Labor market reforms and deeper integration within ASEAN can help achieve the goals under the 13MP, boost growth potential in Malaysia, and support external rebalancing.