Malaysia's economic growth prospects weaken amid Middle East conflict

Kuala Lumpur (ANTARA) - Maybank Investment Bank has slashed its estimate for Malaysia’s real gross domestic product (GDP) growth in 2026 to 4.4% from 4.9%, citing the prolonged risks of the Middle East conflict which are disrupting global supply chains, driving up crude oil prices, and increasing shipping costs.

Malaysia’s economic outlook is under pressure as geopolitical tensions in the Middle East threaten to continue causing disruptions to global trade flows, triggering inflation, and weighing on consumer spending, the research institution stated in a statement on Sunday (17/5), as reported by Xinhua.

According to Maybank, the conflict has heightened the risk of economic disruption through sustained high crude oil prices, a sharp decline in vessel movement through the Strait of Hormuz, and a surge in freight rates, alongside increasing pressure on global supply chains.

Meanwhile, Hong Leong Investment Bank Research remains cautious regarding the spillover effects of a blockade in the Strait of Hormuz, warning that production disruptions could emerge from June this year onwards.

‘For now, we maintain our 2026 GDP growth forecast at 4.5%, in line with the projections from the Central Bank of Malaysia,’ the research institution stated on Monday (18/5).

Additionally, CGS International warned on Friday (15/5) that risks are increasingly leaning towards the downside in the second half of this year, despite expectations of resilient growth in the second quarter supported by strong external demand and domestic activity.

CGS International expects domestic demand to remain supported by policy stability and targeted subsidies, maintaining its 2026 GDP growth forecast at 4.8%.