KUALA LUMPUR, April 14 (Xinhua) -- Economists remain cautious over Malaysia's growth outlook, citing lingering external risks from ongoing geopolitical tensions and their potential spillover effects on the domestic economy.
RHB Investment Bank Research said in a report on Tuesday that while Malaysia is expected to be the least negatively affected economy in ASEAN under the current Middle East conflict, a prolonged escalation could push up oil prices and weigh on trade performance.
It estimated that a sustained rise in crude oil prices from a pre-conflict average of 70 U.S. dollars per barrel to 140 dollars per barrel would mechanically reduce Malaysia's gross domestic product (GDP) growth by around 0.5 percentage points, bringing growth to about 4.2 percent.
Despite the risks, RHB maintained its 2026 GDP growth forecast at 4.7 percent, citing resilience in electrical and electronics (E&E) exports and domestic demand.
Hong Leong Investment Bank Research, on the other hand, trimmed Malaysia's 2026 growth forecast to 4.5 percent from 4.7 percent, citing potential energy supply disruptions.
It said in a recent note that the growth would continue to be supported by strong E&E exports and steady consumption.
Separately, Moody's has in its recent note expected Malaysia's economy to grow 6.6 percent year-on-year in the first quarter, or 0.9 percent on a seasonally adjusted basis.
"Exports have held steady so far, with the key E&E sector still benefiting from the tech boom. Demand for palm oil is also expected to surge as countries turn to alternative fuel sources such as biofuels in response to the spike in global oil prices," said the rating agency.
It added that fuel subsidies may help cushion near-term cost pressures, though prolonged conflict could still weigh on growth through second-round effects. ■