Malaysia’s exposure to escalating tensions in the Middle East and the potential closure of the Strait of Hormuz came under sharp scrutiny in Parliament, as Economic Minister Akmal Nasrullah Mohd Nasir outlined the widening global and domestic fallout on growth, inflation and key industries.
The minister noted that more than 20% of global trade passes through the strategic waterway, with ongoing conflict since late February 2026 driving a sharp spike in energy prices. Brent crude has climbed over 27% year-to-date, averaging US$93.49 per barrel in mid-June, intensifying cost pressures across global supply chains.
He warned that the impact extends well beyond oil, filtering into logistics, shipping insurance, food production, fertiliser costs and industrial inputs. Freight rates have nearly doubled, while marine insurance premiums for high-risk routes have surged as much as 16-fold.
Domestically, Malaysia’s economy remains resilient, with first-quarter 2026 GDP growth recorded at 5.4% and inflation contained at 2% in May.
However, policymakers acknowledged rising pressure on businesses and households, particularly in agriculture, manufacturing and food-related sectors, as import-dependent inputs become more expensive.
Labour market conditions remain broadly stable, though unemployment edged up slightly to 3%, with over 511,000 individuals affected.
To cushion the impact, Akmal Nasrullah said the government has rolled out a four-pronged response covering targeted subsidies, price stabilisation measures, SME financing support and long-term structural reforms under the National Energy Transition Roadmap and the 13th Malaysia Plan (13MP).
“Measures include expanded cash aid programmes, fuel subsidies, tighter price monitoring, logistics coordination with Petronas, as well as RM10 billion in combined financing and guarantees for SMEs through dedicated schemes,” he added.
He also highlighted medium-term strategies under the 13MP, focusing on high-value industries such as semiconductors, digital economy, and green technology, alongside efforts to strengthen supply chain resilience and domestic production capacity.
While acknowledging easing diplomatic signals globally, the minister cautioned that risks remain elevated, stressing that Malaysia’s approach will remain “data-driven, targeted and precautionary” as it navigates prolonged external shocks.
Overall, Akmal Nasrullah emphasised the government’s priorities, which are protecting households, stabilising essential supplies, sustaining industrial activity and safeguarding long-term economic growth under increasingly volatile global conditions.
