Kuala lumpur: Malaysia's short-term economic outlook remains resilient despite the recent blockade of the Strait of Hormuz resulting from stalled United States (US)-Iran peace talks, according to economists.
According to BERNAMA News Agency, IPPFA Sdn Bhd investment strategy director and country economist Mohd Sedek Jantan emphasized that Malaysia's economic growth is supported by existing oil shipments that have already transited the critical waterway, providing a two-month supply buffer. He noted that while growth may experience some moderation, effective government measures could mitigate cost-push inflation, sustaining private consumption as a primary growth driver.
Reports indicate that recent US-Iran negotiations failed in Islamabad, leading US President Donald Trump to enact a blockade on the Strait of Hormuz. The US Central Command (CENTCOM) has announced the implementation of a blockade on all maritime traffic entering and exiting Iranian ports.
Despite these developments, Malaysian Prime Minister Datuk Seri Anwar Ibrahim reported that one of seven ships previously stranded has safely navigated through the Strait, with six more awaiting their turn. Mohd Sedek expressed optimism that these developments would help cushion immediate disruptions to Malaysia's domestic economic activities, though rising cost pressures amid global uncertainties remain a concern.
Universiti Utara Malaysia Economic and Financial Policy Institute senior associate fellow and associate professor Irwan Shah Zainal Abidin echoed Jantan's sentiments, asserting that Malaysia's GDP growth forecast for 2026 remains stable. He highlighted Malaysia's diversified trade and investment portfolio as a protective factor against the geopolitical turbulence.
Regarding oil prices, Mohd Sedek noted that while markets are volatile, a sharp increase in Brent crude prices is unlikely. The strategic objective of the Trump administration's blockade is to counter Iran's economic leverage without completely disrupting global energy flows.
Mohd Sedek further emphasized the importance of targeted government measures to sustain economic growth amid external shocks. He recommended initiatives such as targeted subsidies and financial support to businesses to mitigate the impact on consumers and maintain economic stability.
He also highlighted the need for fiscal prudence in government policy, particularly concerning fuel subsidies. He suggested a gradual adjustment of subsidized fuel prices to balance household protection with fiscal sustainability.
Irwan Shah suggested maintaining subsidy programs for the time being, with the option of introducing stimulus packages if geopolitical tensions persist. He referenced the potential introduction of a mini budget as a contingency measure.