AMRO’s 2018-19 Consultation Report on Malaysia

The Malaysian economy proved resilient to escalations in U.S.-China trade tensions and domestic commodity supply disruptions in 2018, thanks to robust private consumption and low inflation that persisted through the year. Although the unexpected election outcome and heightened global risk aversion triggered sharp foreign capital outflows in May through the second half of the year, financial conditions have remained stable and BNM’s reserves are adequate to cover external funding needs. Despite the revamp in fiscal management, fiscal consolidation has continued. Going forward, the policy mix should focus on sustaining fiscal consolidation efforts while safeguarding financial and external stability.

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