KUALA LUMPUR, March 21 (Xinhua) -- After a strong recovery in 2022, Malaysia's growth is projected to moderate in 2023 due to external headwinds, and inflation to remain elevated, the International Monetary Fund (IMF) said in an end-of-mission press release Tuesday.
The IMF said in the release that Malaysia's growth is projected to moderate to about 4.5 percent in 2023, driven by external headwinds.
Malaysia's inflation is also projected to remain elevated at about 3.25 percent, with likely persistence in core inflation, amid a positive output gap, and evidence of a build-up of demand-side pressures.
Downside risks, according to the IMF, are mostly external, including an abrupt global slowdown and larger than envisaged monetary policy tightening by major central banks.
Growth reached 8.7 percent, driven by pent-up domestic demand following the reopening of the economy in April 2022 and resilient export performance, it said.
However, the IMF noted the recovery in Malaysia remains uneven with agriculture, mining, and particularly construction sectors remaining below pre-pandemic levels.
With record spending on subsidies, it also said that Malaysia's headline inflation did not surge in tandem with global food and commodity prices but was still on the rise for most of 2022, reaching 3.3 percent for the year.
It also said Malaysia's inflation expectations remained well anchored.