ESCALATING global geopolitical tensions are raising the risk of energy supply disruptions, sharp increases in commodity prices and sustained pressure on household living costs, prompting calls for Malaysia to strengthen its economic preparedness for worst-case scenarios, according to analysts.
While Malaysia’s economic fundamentals remain relatively strong, external shocks beyond its control, including geopolitical conflicts, trade restrictions and global supply chain disruptions, could still have direct implications for the domestic economy.
Affin Bank Bhd chief economist Alan Tan Chew Leong said domestic demand continues to anchor Malaysia’s growth, supported by consumer spending and ongoing investment activity.
However, he cautioned that inflationary pressure remains a key risk that could erode disposable income and affect spending patterns as well as overall growth.
“As a net oil importer, Malaysia is also exposed to fuel supply volatility. The question is how long existing supplies can last and where the next sources will come from.
“Experience during the COVID-19 pandemic showed that global oil supply recovery took around 15 to 18 months, particularly when it involved restoring production operations, transportation and energy infrastructure.
“However, this time the disruption period is expected to be shorter, but it will depend on how long the crisis persists and global oil price movements,” he said at a webinar titled West Asia Conflict: Global and Malaysian Impact and Implications, organised by the ASEAN Economic Club (AEC) and the Kuala Lumpur Economic Club (ECKL).
He said current fuel supplies remain sufficient until around June, but uncertainty over subsequent shipments requires close monitoring by relevant authorities.
Alan added that Bank Negara Malaysia’s (BNM) financing facilities for small and medium enterprises (SMEs) could help businesses absorb part of rising operational costs.
At the same time, he said the government still has fiscal space to introduce stimulus measures should economic conditions weaken, including cash assistance through programmes such as Sumbangan Asas Rahmah (SARA) or similar initiatives.
He also stressed the importance of ensuring adequate supplies of critical goods such as fertiliser and food to prevent broader supply chain disruptions.
“We do not want a situation of shortages that eventually leads to other problems such as packaging disruptions or raw material shortages,” he said.
Meanwhile, IPPFA Sdn Bhd Director of Investment Strategy and Economics Mohd Sedek Jantan said Malaysia remains on a positive growth trajectory, with gross domestic product (GDP) projected at around 4.5 per cent or slightly higher.
However, he said the actual impact on consumers would depend on the cost structure of goods, particularly the extent of import dependency.
“For products with import components of between 40 and 60 per cent, we expect price increases of at least 10 to 15 per cent. This is the minimum impact that could occur under global cost pressure conditions.
“In contrast, for fully domestic products, the impact is more moderate at around 3.5 to 4.5 per cent because production costs are more focused on local factors such as energy and fuel.
“Although there is some imported input in domestic goods, the impact is largely a first-round effect and does not exert significant pressure on final prices,” he said.
Mohd Sedek noted that the medical sector is among those most vulnerable to price increases due to its heavy reliance on imported supplies.
He said the government has taken steps to absorb part of energy and transport costs to help keep medical supplies affordable.
For essential consumer goods such as tissue products and basic food items, he said price increases are expected to remain contained, with estimated rises of 3.5 to 4.5 per cent based on crude oil price projections of between US$95 and US$98 per barrel. - April 22, 2026
