Country Report No. 2023/185

Malaysia registered a strong post-pandemic recovery in 2022. Its strong macroeconomic policy frameworks, including a track record of fiscal prudence and a credible monetary policy framework, have served the country well. Growth reached 8.7 percent in 2022 driven by pent-up domestic demand following the reopening of the economy in April 2022 and strong export performance. However, the recovery remains uneven, with agriculture, mining, and particularly construction sectors remaining below pre-pandemic levels, and inequality has risen during COVID-19. While costly and untargeted spending on subsidies, the highest in Malaysia’s history, helped suppress inflationary pressures, inflation remained broad-based and elevated at 3.4 percent for the year, despite recent signs of moderation. Inflation expectations, however, remained well anchored.

The European Investment Bank (EIB) and the French company Egis International have entered into a settlement agreement that addresses Egis International’s failure to make the required disclosures in its covenants of integrity in connection with certain projects financed by the EIB.