KUALA LUMPUR: The International Monetary Fund, in giving the thumbs up for the outlook of the Malaysian economy, said pushing ahead with structural reforms will be important to raise the growth potential.
The increasingly challenging environment requires continued implementation of sound macroeconomic policy.
This was part of the assessment and conclusion just released by the IMF executive board on its staff report on the 2016 Article IV Consultation with Malaysia early this year.
It praised the Malaysian authorities for their timely response in a decisive fashion whilst the policy agenda remained on track.
This was in response to the external and domestic shocks which affected the highly open and diversified economy since late 2014, including sharply lower energy prices, spillovers from China, capital outflows and domestic political controversy.
The economy has remained resilient, although growth moderated to 5 per cent in 2015 from 6 per cent in 2014, led by domestic demand in the face of weak external demand.
"Directors underscored that protecting and strengthening the fiscal position should continue to be a top priority, including by adhering to the federal budget deficit target for 2016 and by balancing the budget by 2020."
The directors also concurred that the current accommodative monetary policy stance is appropriate in an environment of moderating growth and low inflation.
The IMF expects economic growth to ease to a still robust 4.4 per cent in 2016, underpinned by healthy, albeit moderating, domestic demand but constrained by weak external demand.