PETALING JAYA: The ongoing conflict in the Middle East is expected to have a multifaceted impact on Asean economies.
The Persian Gulf producers play a critical role in the supply of commodities like urea fertiliser (49%), sulphur (45%), methanol (35%), helium (33%), ethylene (20%) and bitumen (18%), and any supply disruption will impact sectors including petrochemical, mining, construction, transport and agricultural supply chains, thereby increasing prices of related products and compounding inflation shocks, Maybank Investment Bank Research (Maybank IB) said in a recent report.
In response to the hostilities that just entered their fourth week, the research house cut its economic growth forecast for Asean-6 economies, noting that monetary policy bias could reverse course to contain price pressures and intensify fiscal strains.
“We trim our Asean-6 gross domestic product (GDP) growth forecast to 4.5% in 2026 (from 4.8%) and 4.7% in 2027 (from 4.8%), with larger cuts in the Philippines (minus 0.4%), Vietnam (minus 0.4%) and Thailand (minus 0.3%),” the research house stated.
“We raise our Asean-6 inflation forecast to plus 2.7% in 2026 (from 2.2%) and plus 2.7% in 2027 (from 2.5%), with higher adjustments for Thailand (plus 0.8% in 2026), the Philippines (plus 0.5%), and Indonesia (plus 0.5%),” it added.
Maybank IB trimmed its GDP growth outlook for Malaysia to 4.9% in 2026 from 5.1% forecast earlier. Moreover, inflation in the country was revised up to 1.8% in 2026 from 1.7% earlier.
It stated that Malaysia stands out as a net energy exporter (1.1% of GDP in 2025), which will help cushion the Middle East shocks.
The country’s trade surplus in gas exports offsets the trade deficits in crude oil and petroleum products.
Nevertheless, higher energy prices will add to the fiscal burden of subsidising fuel prices.
“For Malaysia, we estimate that every US$10 a barrel rise in annual average crude oil price can increase RON95 subsidy costs by around RM1.5bil to RM2bil,” Maybank IB noted.
The allocation for fuel subsidies is based on an annual average crude oil price assumption of US$60 to US$65 per barrel.
It forecast crude oil price will average about US$75 a barrel in 2026 (up from US$65) and US$70 in 2027 (up from US$66), based on a short-lived conflict and a gradual restoration of oil supplies.
Persian Gulf crude oil account for some 69% of Malaysia’s imports.
The research house said energy price shocks had short-circuited the monetary easing cycle, and now expects central banks of the Philippines to hike rates by 25 basis points, and Singapore to tighten (via a steeper appreciation bias in April).
Maybank IB, however, expects Bank Negara Malaysia to hold steady in 2026.
The research house warned that fertiliser shortages into the upcoming planting season could push up farming costs, lower crop yields, and affect food supply during the harvest season later in the year.
Asean’s direct goods export exposure to the Middle East is limited, thereby mitigating direct disruptions from the war and port closures, it added.
