MALAYSIA is expected to withstand the economic shockwaves from the escalating United States-Israel-Iran conflict more effectively than several neighbouring Southeast Asian economies, as rising global oil prices and the country’s status as a hydrocarbon exporter strengthen its resilience against external volatility.
Analysts from MARC Ratings said Malaysia’s relatively lower dependence on imported energy places it in a stronger position compared with regional economies such as Thailand and the Philippines, which remain heavily exposed to fluctuations in global fuel prices.
Senior economist Kamal Zharif Jauhari said Malaysia’s oil and gas industry continued to provide a strategic economic cushion even as geopolitical instability in West Asia disrupted international trade flows and energy markets.
“Thailand and the Philippines are net energy importers, and the situation puts greater pressure on their economic growth when oil prices rise.
“Malaysia is in a more balanced position because we still have an oil and gas sector that can support the economy,” he said during the MARC360 special edition webinar.
Kamal noted that the full impact of the conflict had not yet filtered into Malaysia’s broader economic data, adding that second-quarter performance would serve as a critical indicator of how geopolitical tensions were affecting inflation, operating costs and market sentiment.
He said geopolitical shocks typically require time before translating into weaker consumer confidence, higher business expenses and slower investment activity.
“If second-quarter growth remains in line with first-quarter performance, there is a possibility that Malaysia’s current growth forecasts could be revised higher,” he said.
Malaysia’s economy is currently forecast to expand by 4.4 per cent this year, although Kamal described the estimate as conservative given continued strength in domestic consumption, investment activity and export-oriented industries.
He pointed to sustained growth in wholesale and retail trade, alongside domestic credit card spending expanding at approximately five per cent, as evidence that household spending sentiment remained stable despite global uncertainty.
Kamal also highlighted the continued momentum of Malaysia’s electrical and electronics sector, which is benefiting from rising artificial intelligence adoption and accelerating investment in regional data centres.
At the same time, he said prolonged instability in West Asia could create upside potential for Malaysia through higher crude oil and liquefied natural gas prices, supporting export revenues and government income linked to the energy sector.
Malaysia’s petroleum product exports rebounded sharply in March, recording growth of 23.5 per cent after declining during the previous two months.
However, Kamal warned that inflationary pressures were likely to intensify over the coming months, particularly through transportation and logistics costs stemming from disruptions in the Strait of Hormuz, a critical global shipping route for oil and gas supplies.
“Transport inflation rose 2.1 per cent month-on-month in March, and the full impact of this conflict is only expected to be seen over the next two to three months,” he said.
Meanwhile, Revina Sidhu said Malaysia’s financial markets had so far remained relatively stable despite heightened geopolitical risks and ongoing global uncertainty.
She said international investors continued to regard Malaysia as one of the region’s more resilient economies, particularly in relation to bond market stability, monetary policy management and currency performance.
According to Revina, the ringgit emerged as one of the stronger-performing regional currencies during the first quarter of 2026 despite persistent geopolitical tensions weighing on global trade, commodity prices and capital flows.
She said the currency’s resilience reflected the underlying strength of Malaysia’s domestic financial system even as inflationary concerns persisted and expectations grew that United States interest rates would remain elevated for longer.
Revina added that Bank Negara Malaysia was expected to maintain the overnight policy rate at 2.75 per cent as inflation remained manageable at present.
Nevertheless, MARC Ratings has revised its 2026 ringgit forecast to between RM3.92 and RM4.07 against the US dollar, compared with its earlier estimate of RM3.88 to RM3.98 before tensions in West Asia escalated.
She said the revised outlook reflected expectations of prolonged high US interest rates, slower foreign fund inflows and a slightly higher inflation trajectory as geopolitical instability continues to cloud the global economic outlook. - May 19, 2026
