Accra:Malaysia should focus on fiscal consolidation by broadening its tax base and improving subsidy targeting to better withstand future economic shocks.

According to BERNAMA News Agency, Krishna Srinivasan, director of the IMF Asia and Pacific Department, commented that Malaysia and Brunei are the two ASEAN countries benefiting from recent energy shocks due to their energy exports. Both countries have maintained fiscal discipline, price stability, and fiscal integrity.

Srinivasan emphasized that for Malaysia, continuing fiscal consolidation through tax base broadening, reducing incentives, and better targeting of subsidies would be beneficial. He noted that this approach is vital globally as economies need to prepare for future disruptions by strengthening fiscal buffers. The IMF's regional assessment also highlighted the necessity for fiscal prudence due to public debt levels and constrained fiscal space.

The IMF reported that Asia-Pacific's economic resilience is bolstered by global growth, technology exports, and trade diversification. Despite these strengths, risks remain, such as tensions in the Middle East, AI-related profitability concerns, and higher borrowing costs.

The region's growth is expected to moderate to 4.8% in 2026 and 4.4% in 2027, while still contributing significantly to global growth. The IMF advised central banks to prioritize price stability and be prepared to tighten policy if inflation persists. It also stressed the importance of protecting people from economic shocks while maintaining sound fiscal frameworks. Additionally, structural reforms, including addressing youth unemployment and energy security, were recommended across the Asia-Pacific region.