Real GDP in Malaysia is forecast to grow 4.3% in 2024, a rise from the 4.0% growth predicted for this year.

The increase could predominantly be fuelled by elevated global export demand – especially from the technology sector – according to the International Monetary Fund.

Malaysia is a very open economy, particularly in terms of exporting electrical and electronics products, says IMF’s Asia Pacific regional studies division chief, Shanaka (Jay) Peiris.

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

In regard to Malaysia’s inflation, Peiris said it has been gradually slowing, but the subsidy reforms tabled in Budget 2024 may pose some risks, The Sun Daily reports.

That said, he believes the subsidy reforms would be a “one-off”, and further measures by Bank Negara Malaysia (BNM) would not be required.

“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 stated

Peiris went on to add that the IMF’s recommendation for Malaysia in the last report revealed the monetary policy should be sufficiently restrictive to revert inflation back towards the target of 2-3% over the medium term.

“At the moment, we have seen interest rates raised, and that inflation has been gradually coming down right now. So in that sense, we think that a maintained restrictive stance should help bring down inflation,” he concluded