Kuala lumpur: Domestic demand remains a key buffer for Malaysia's economy amid the ongoing conflict in West Asia, said Affin Group chief economist Alan Tan. However, he cautioned that reliance on domestic resilience alone may not be sufficient to fully offset weaker exports if global conditions deteriorate further.

According to BERNAMA News Agency, Tan highlighted the strength of Malaysia's domestic demand, pointing out its manifestation in tourism, private consumption spending, and the investment surge, particularly in Johor's data centre developments. He expressed these views during a session at the ASEAN Leadership and Partnership Forum 2026, which focused on navigating the global economic and energy crisis.

Tan warned that if the conflict persists beyond six months and Brent crude prices remain high, Malaysia might need to reconsider fiscal policies, including potential changes to fuel pricing. On the geopolitical front, IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan noted that global powers are engaging less directly with ASEAN, slowing regional economic integration and necessitating cautious navigation of external shocks by member states.

Jantan also mentioned that Malaysia's reliance on public transport, such as buses, has mitigated some domestic economic pressures, reflecting governmental efforts to manage costs. However, he emphasized the importance for policymakers to account for the broader regional inflation landscape and its potential impact on business growth across Asia.