KUALA LUMPUR: The International Monetary Fund (IMF) expects Malaysia’s growth to remain stable in 2020 before rebounding in the medium term, with inflation slightly higher and the current account declining.
The forecast was made by the IMF executive board on February 7 after concluding its annual consultation with Malaysia.
The fund said domestic demand would be the main driver of the country’s growth, with stable employment and income growth supporting private consumption.
“Private investment will gradually pick up as the business environment continues to improve and external uncertainties dissipate,” the IMF said in a statement late last week.
The fund expects Malaysia’s headline inflation to increase to slightly over 2.0 per cent as domestic demand rises, the base effect of the consumption tax regime change vanishes and fuel subsidies become targeted.
The current account surplus is expected to narrow to 2.7 per cent of gross domestic product (GDP) as capital imports resume.
“Over the medium term, growth should converge to potential (just below 5.0 per cent) and inflation remains under control, while the current account surplus continues to moderate,” it added.
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