This latest war could potentially impact consumer prices in Malaysia due to supply chain disruptions, said Monash University economics professor Niaz Asadullah.
“Increased tensions and potential supply disruptions in the Middle East may cause crude oil prices to rise. This could have implications for indirect imports into Malaysia, as the higher transport costs would be passed on to consumers.
“While some price increases may be temporary, if the war persists or escalates, it could lead to more sustained disruptions in supply chains and higher costs, potentially impacting consumer prices in the long run,” Niaz said.
However, he said Malaysia has reduced its dependence on crude oil imports and is itself one of the largest (crude oil) producers in Southeast Asia.
To mitigate the potential economic impact on local markets, Niaz said Malaysia should explore diversifying its import sources and reduce its reliance on countries directly affected by the latest war.
“The government could foster domestic production capabilities in key sectors to enhance self-sufficiency and promote stable pricing.
“Strengthening diplomatic efforts to support peaceful resolutions in the Middle East could also contribute to stability and reduce economic uncertainties,” he said.
Supporting his position, Niaz said as a trade-dependent economy, Malaysia needs to exercise caution in its statements regarding the Palestinian-Israeli war.
“We just recovered from the economic problems caused by the Covid-19 pandemic and have finally stabilised our inflation rate, which is a good thing.
“Unlike Ukraine and Russia, Israel and Palestine are not major exporters of food grain or oil, so our economy should not be critically affected by the war there.”