KUALA LUMPUR, April 17 (Xinhua) -- The escalating conflict in the Middle East is expected to begin weighing on Malaysian business performance over the next two to three months, as rising costs filter through the economy, the Malaysian Institute of Economic Research (MIER) said Friday.
Consultations with industry players, financial institutions and business groups established a broad consensus that while direct impacts have yet to fully materialize, near-term pressures are building, the MIER said in a statement.
"A key expectation is that logistics costs and input prices will inevitably rise, which will, in turn, be quickly reflected in the cost of living. These pressures are expected to affect business performance over the next two to three months, particularly among small- and medium-sized enterprises (SMEs)," it said.
Some participants have already reported isolated fuel shortages and the closure of certain construction firms, signaling early stress, it said.
Sectors such as agriculture, food services, printing and small-scale enterprises are seen as especially vulnerable, with some businesses already feeling the strain.
"Implications were also highlighted in relation to food security, including concerns over fertilizer shortages, rising diesel prices for agricultural machinery, and recent drought conditions in Kedah state. These factors may contribute to disruptions in the food supply chain and affect national food self-sufficiency," it said.
Participants also warned that a prolonged conflict could trigger a rise in insolvencies and business failures, prompting calls for more pre-emptive government measures.
While financial institutions have rolled out targeted repayment assistance and microfinancing schemes, access to support remains uneven. The MIER said better coordination and dissemination of aid programs through business associations would be critical.
Policy proposals include temporary tax relief, adjustments to fuel subsidies and targeted cost reductions to help businesses weather the near-term shocks. ■