Malaysia's Advantage Over Neighbouring Economies

Malaysia Has More Cover From The Middle East Conflict Than Its ASEAN Neighbours

Christina Chandra

19th May 2026 - 4 min read

Malaysia is expected to come through the economic fallout from the West Asia conflict in better shape than several of its neighbours, though rising transport costs and a revised ringgit outlook are signs that pressure is arriving, according to credit rating agency MARC Ratings.

Speaking at the MARC360 special edition webinar on Monday, senior economist Kamal Zharif Jauhari said Malaysia’s position as a hydrocarbon-exporting country gives it a buffer that Thailand and the Philippines do not have. Both countries depend heavily on imported energy, so higher global oil prices hit their growth more directly.

“Thailand and the Philippines are net energy importers, and the situation puts greater pressure on their economic growth when oil prices rise,” Kamal said. “Malaysia is in a more balanced position because we still have an oil and gas sector that can support the economy.”

Oil Exports Give Malaysia An Edge Over Its Neighbours

Malaysia’s petroleum product exports grew 23.5% in March, recovering after two months of contraction. Higher crude oil and liquefied natural gas (LNG) prices, partly driven by the conflict, provide some upside for the country as a seller of these commodities, even as they raise costs elsewhere.

Second Quarter Will Be A Clearer Test

The full effects of the conflict have not yet appeared in Malaysia’s economic data. Shocks from geopolitical events typically take months before they show up in business costs, spending patterns, and investment decisions.

Kamal said the second quarter of 2026 will offer a more accurate read on where things stand. If growth holds close to the first quarter’s pace, the current annual growth forecast of 4.4% could be revised upward. That figure, he noted, is already considered conservative.

For now, the underlying economy has held up. Credit card spending and wholesale and retail trade are both growing at around 5%, and the electrical and electronics (E&E) sector continues to expand, supported by rising demand for artificial intelligence infrastructure and data centre development.

Transport Costs Are The Nearest Visible Pressure

The conflict has disrupted shipping through the Strait of Hormuz, a key route for global oil trade, and that is already feeding into Malaysia’s transport inflation figures. The rate rose 2.1% month-on-month in March, and Kamal said the full effect is only expected to become visible over the next two to three months.

Transport costs run through a wide range of everyday prices. Goods that need to be moved, from groceries to imported consumer items, become more expensive when logistics costs rise. Businesses tend to absorb some of that pressure before passing it on, which means the impact on prices may arrive gradually rather than all at once.

The Ringgit Has Held Up, But The Forecast Has Shifted

MARC Ratings economist Revina Sidhu said the ringgit was among the better-performing currencies in the region during the first quarter of 2026, and Malaysia’s financial markets have remained relatively stable.

Bank Negara Malaysia (BNM) is expected to hold the overnight policy rate (OPR), the central bank’s benchmark lending rate, at 2.75%. That signals BNM sees no immediate need to raise rates to contain inflation.

MARC has nonetheless revised its 2026 ringgit forecast to between RM3.92 and RM4.07 against the US dollar, compared with an earlier range of RM3.88 to RM3.98 before the conflict escalated. The revision reflects expectations of US interest rates staying higher for longer, softer foreign investment inflows into Malaysia, and a slightly higher inflation outlook.

If you are planning around the exchange rate, whether for travel, overseas purchases, or remittances, the ringgit is expected to remain broadly stable. Strengthening of the Ringgit looks unlikely as long as global conditions stay unsettled.

Christina Chandra

Christina writes about personal finance with an eye for making the complicated feel straightforward. She is drawn to the everyday money decisions people face and genuinely enjoys finding the clearest way to explain them. Between articles, she is probably napping, on a hiking trail, or terrorising her sister’s cats.

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