PETALING JAYA: A global oil shock is casting a shadow over Malaysia’s tourism ambitions for 2026. A surge in jet fuel prices amid escalating US-Iran tensions is pushing up airfares and constraining flight capacity, raising concerns that foreign arrivals may struggle to match last year’s strong performance, BIMB Research says.
“Malaysia’s tourism outlook in 2026 is turning more challenging, with foreign arrivals likely to struggle to exceed 25 million after a strong 26.6 million in 2025.”
Visit Malaysia 2026 targets 47 million arrivals and RM329bil in tourism receipts.
“Escalating US-Iran tensions pose a key downside risk through higher jet fuel prices, which are feeding into more expensive airfares, tighter flight availability and capacity constraints, especially on long-haul routes,” the research firm said in a report.
These factors are likely to deter price-sensitive travellers and cap inbound growth, even as Malaysia remains a relatively safe destination and benefits from a more diversified tourist base led by Singapore, China and Indonesia.
Overall, it said any upside from regional travel diversion is expected to be limited, pointing to moderating tourism momentum and a smaller contribution to domestic consumption this year.
An analyst told StarBiz that beyond airlines and travel operators, the impact is likely to be felt across a broader ecosystem of tourism-linked sectors, including bottled water producers, hotels and retail malls, as softer tourist arrivals translate into weaker footfall and consumption spending.
Touching on distributive trade, which comprises retail, wholesale and motor vehicle sales, and serves as a key barometer of consumer spending, BIMB Research noted that it had showed signs of moderation in February 2026.
The headline growth of distributive trade eased to a six-month low of 5.3% year-on-year (y-o-y) and recorded a second consecutive month of contraction on a month-on-month basis. Retail trade remained the key bright spot, accelerating to a 13-month high of 7.7% y-o-y, underpinned by festive spending linked to Chinese New Year, early Ramadan demand, and a higher number of holidays. holidays.
In contrast, wholesale trade growth softened to a six-month low of 5.7%, while motor vehicle sales declined by 5.3% y-o-y.
The research house said there was a sharper moderation in imported consumption goods
“A stronger ringgit should continue to support Malaysia’s consumption in 2026 via better sentiment and more favourable foreign exchange pricing.
“By March, the ringgit had strengthened to RM3.95 against the US dollar, appreciating against most major and regional currencies,” said BIMB Research.
