Malaysia’s economy is projected to grow 4.7% this year, supported by strong momentum, though external risks remain, the International Monetary Fund (IMF) said. The agency urged fiscal consolidation under the Fiscal Responsibility Act (FRA) and called for a gradual phase-out of fuel subsidies to strengthen macroeconomic stability. Inflation, which fell to 1.8% in 2024, is expected to rise to 2.6% in 2025 due to gasoline subsidy reforms before moderating in 2026. The IMF noted that downside risks include global trade slowdowns and geopolitical tensions, while potential investment acceleration could support growth. It said Malaysia’s financial sector remains stable, with banks maintaining strong capital and liquidity buffers, and described the country’s current monetary policy stance as appropriate.