Malaysia better positioned than Asean peers, says MARC Ratings [WATCH]

KUALA LUMPUR: Malaysia is expected to be in a stronger position than several other Asean economies in managing the impact of the US-Israel-Iran conflict, although global economic pressures are likely to intensify in the coming months, according to MARC Ratings.

Senior economist Kamal Zharif Jauhari said Malaysia’s lower reliance on energy imports gives it an advantage over economies such as Thailand and the Philippines, which are more exposed to global oil price shocks.

He said Malaysia, as a hydrocarbon-exporting country, still has some buffer to absorb external shocks even as the conflict in West Asia continues to disrupt global energy markets and international trade flows.

“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 on Monday.

Kamal said the full economic impact of the conflict has yet to be fully reflected in Malaysia’s data, adding that the second quarter of this year is expected to be a key test for the domestic outlook.

He said the transmission of geopolitical shocks typically takes time before affecting operating costs, inflation, and consumer and investor sentiment.

If second-quarter growth remains in line with first-quarter performance, Kamal said there is a possibility that Malaysia’s current growth forecasts could be revised higher.

He added that Malaysia’s domestic economy continues to be supported by stable consumer demand, investment activity, and the electrical and electronics (E&E) sector, which is benefiting from rising artificial intelligence (AI) adoption and data centre expansion.

“Malaysia’s economy is projected to grow 4.4 per cent this year, and the figure is still considered conservative. If second-quarter performance remains strong like the first quarter, there is room for an upward revision,” he said.

He noted that wholesale and retail trade, as well as domestic credit card spending, are still expanding at around five per cent, reflecting steady consumer sentiment.

Kamal also said the conflict in West Asia could provide some upside for Malaysia as a hydrocarbon exporter, supported by higher crude oil and liquefied natural gas (LNG) prices.

He said Malaysia’s petroleum product exports returned to strong growth of 23.5 per cent in March after contracting in the previous two months.

However, he warned that inflationary pressures are likely to become more visible in the coming months, particularly through higher transportation and logistics costs following disruptions in the Strait of Hormuz, a key global oil shipping route.

“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, MARC Ratings economist Revina Sidhu said Malaysia’s financial markets have so far remained relatively stable despite rising global uncertainty.

She added that the market still views Malaysia as among the more resilient economies in the region, particularly in terms of bond market stability and monetary policy.

Revina said the ringgit has continued to show resilience, emerging as one of the region’s better-performing currencies in the first quarter of 2026 despite ongoing geopolitical tensions that have weighed on global trade, energy prices, and capital flows.

The performance, she said, reflects the resilience of Malaysia’s domestic financial markets despite persistent geopolitical uncertainty, inflationary pressures, and expectations that US interest rates will remain higher for longer.

She added that Bank Negara Malaysia is expected to maintain the overnight policy rate (OPR) at 2.75 per cent as inflation remains manageable.

However, she said MARC Ratings has revised its 2026 ringgit forecast to between RM3.92 and RM4.07 against the US dollar, compared with an earlier projection of RM3.88 to RM3.98 before the conflict escalated.

She noted that the revision reflects expectations of prolonged high US interest rates, more moderate foreign fund inflows, and a slightly higher inflation outlook.

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