In past week the World Bank and the IMF have issued reports and statements concerning the Malaysian economy. The IMF released a brief statement entitled IMF Staff Completes 2018 Article IV Visit to Malaysia while the World Bank published its report in the Malaysia Economic Monitor.

The IMF note highlighted in highly nuanced language, in summary form, the outcome of the Annual Article IV Consultations with the Government.

The highlights made reference to recent economic performance and revised forecasts for the current year and expected growth in 2018. The revisions in the estimated and projected GDP growth rates for Malaysia are thus in step with revisions that the IMF has made for almost all countries since it issued its earlier estimates and forecasts.

Beyond the reference to growth prospects the statement took up a number of other policy concerns. It made veiled statements about the need for “higher revenues”—alerting all and sundry that taxes will have to be raised; it reminded the need to implement the adjustment programs outlined in the 11th Five Year Plan; etc. meaning that reform policies are not being implemented. The statement is thus a rap on the Government’s knuckles .

It is not inappropriate to read between the lines from the following:

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

The statement contains cautionary remarks that urge the Government to pay heed to the downside risks it faces for which it is ill prepared. Read the rest of this entry »