MALAYSIA’S relatively low inflation environment is expected to help the country weather the current energy supply shock, even as global oil prices are projected to remain higher for longer amid the ongoing war in West Asia, said Bank Negara Malaysia (BNM) Governor Datuk Seri Abdul Rasheed Ghaffour.
He said the central bank is projecting headline inflation to average between 1.5 per cent and 2.5 per cent in 2026, noting that the present situation reflects a supply-driven shock, with developments in global energy markets beginning to feed into domestic price dynamics.
"Certainly, what we are facing right now is really a supply shock, and it is good to see how this fits into our domestic prices,” he told CNBC in an interview held in Washington which was reported in Bernama.
Abdul Rasheed is part of the Malaysian delegation led by Finance Minister II Datuk Seri Amir Hamzah Azizan at the 2026 Spring Meetings, which will take place from April 13 to April 18 at the International Monetary Fund and World Bank Group headquarters in Washington.
Abdul Rasheed also said oil prices are expected to remain elevated for an extended period, even if the war ends within the next few weeks.
"Although oil prices have gone up, we still have fuel subsidies for a group of the population under BUDI95, so that will, in a way, dampen the transmission of global cost conditions into domestic prices,” he added.
He highlighted that Malaysia’s role as a net energy exporter also helps cushion the current supply shock.
"The strengthening of the ringgit will also have some impact in terms of dampening the transmission of prices, but we are watching this very closely,” he added.
Previously, BNM released a baseline projection of crude oil prices between US$70 and US$90 per barrel, with an optimistic scenario ranging from US$90 to US$100 and a pessimistic outlook of US$110 and above.
As for the economy, BNM noted that Malaysia’s economic growth projection of 4.0 to 5.0 per cent for the year incorporates the baseline scenario and part of the downside risks.
On the domestic front, Abdul Rasheed noted that the tourism sector has recorded a strong recovery, surpassing pre-pandemic levels in both arrivals and spending, thus helping to lift the economy.
"In terms of tourist arrivals last year, it was quite good. In fact, it surpassed the levels we saw pre-pandemic, both in terms of tourist arrivals and tourist spending itself,” he said.
Meanwhile, he assured that Malaysia’s economy is supported by stronger-than-expected growth and resilient fundamentals amid global uncertainties.
"The country’s growth performance in the third and fourth quarters of last year exceeded projections, with the economy expanding by 5.2 per cent.
"Therefore, we are entering this from a position of strength. Entering into this from a position of strength does help us, but more importantly, we do have strong fundamentals that will help us weather this situation,” he added.
He noted that key growth drivers remain intact, with private consumption and investment continuing to show robustness.
"In terms of the drivers of growth, what we saw last year in terms of private consumption and investment was still robust, and despite all the uncertainty that we discussed last year, exports performed rather well,” he said.
On export performance, Abdul Rasheed said it was particularly supported by sustained demand for electrical and electronics, driven by rapid developments in artificial intelligence. - April 17, 2026
