IMF projects Malaysia's economic growth at 5-5.5 pct in 2018

Source: Xinhua| 2017-12-12 13:37:31|Editor: Yamei
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KUALA LUMPUR, Dec. 12 (Xinhua) -- The International Monetary Fund (IMF) has projected Malaysia's real gross domestic product (GDP) growth to be 5 to 5.5 percent next year.

In its preliminary findings following her annual visit for the 2018 Article IV Consultation, mission leader Nada Choueiri said, the Malaysian economy has shown resilience in recent years and continues to perform well.

"Its real GDP growth has surprised on the upside and is projected at 5.5 to 6 percent for 2017, driven by domestic demand and robust exports, while inflation has increased on the back of higher oil prices and is projected at close to 4 percent," she said.

As for 2018, she projected a real GDP growth of 5 to 5.5 percent, as the cyclical upturn will begin to normalize, momentum in activity is expected to remain strong in the first half of the year, supported by domestic demand and continued strength in global trade.

Headline inflation for 2018 is expected to decline to the 3 to 3.5 percent range on lower impact from global oil prices, she added.

Choueiri also said the risks to the near-term outlook are balanced, as strong global demand for electronics, which has benefited Malaysia's exports, could last longer than anticipated, while downside risks include policy uncertainty in advanced economies and tighter global financial conditions.

She sees Malaysian government's planned pace of fiscal consolidation for 2017 to 2018 is appropriate, and believed it would help build buffers and maintain financial market confidence.

In the medium term, she said the fiscal policy should follow a gradual consolidation path, and the composition of adjustment could be improved to make it more revenue based and make room for the structural reforms and increased social spending for inclusive growth.

"Medium term fiscal targets should be better communicated," she said.

Meanwhile, she said the Malaysian financial sector is resilient as bank profitability and liquidity are sound and corporate access to credit remains healthy.

"While housing price growth has moderated, pockets of risks exist in exposures to household mortgages and the property development sector. However, their impact on macro-financial stability appears contained," she said.

An IMF team, led by Choueiri, visited Kuala Lumpur and Putrajaya from Nov. 28 to Dec. 8 to conduct discussions for the annual visit.