The Malaysian economy is projected to grow moderately by 4.2 percent in 2023 after an exceptionally strong rebound of 8.7 percent last year, reflecting strong external headwinds. Growth momentum remains robust, supported by resilient domestic demand and strengthening tourism recovery owing to border reopening by regional economies. Labor market conditions continue to improve. Unemployment rate has fallen to near pre-pandemic level and labor force participation has soared to a record high.

Inflation has peaked and is expected to gradually decline in the near term, but will remain elevated. Monetary policy normalization has been conducted at a gradual and measured pace since May 2022 to tame the broad-based increase in inflation amid the strong economic rebound.

These conclusions are highlighted in the 2023 Annual Consultation Report on Malaysia.