Malaysia has demonstrated remarkable resilience against global trade tensions and policy uncertainty with its economy expanding at a healthy pace this year, according to the International Monetary Fund's mission chief for Malaysia, Masahiro Nozaki.
The nation's strong performance, supported by robust domestic consumption and investment, solid employment growth, and a global technology sector upcycle, partly reflects sound economic policies and prudent macroeconomic and financial management by Malaysian authorities.
The IMF projects Malaysia's growth will moderate slightly from 4.6 percent in 2025 to 4.3 percent in 2026, primarily due to the impact of higher US tariffs, while inflation averaged 1.4 percent during January–October 2025 and is expected to remain stable, gradually returning to its long-term average of 2 percent.
Nozaki welcomed the government's plan to reduce the fiscal deficit from current levels to 3.5 percent of gross domestic product in 2026 and to 3 percent by 2028, emphasizing that rebuilding fiscal buffers remains critical as federal government debt stood at 64.6 percent of GDP at end-2024, still above pre-pandemic levels.
The IMF official stressed that swift implementation of structural reforms under the 13th Malaysia Plan is essential for further domestic-driven and inclusive growth, particularly labor market reforms aimed at increasing private sector wages, reducing skill-related underemployment, and raising female labor force participation to achieve the plan's ambitious development goals.
