PETALING JAYA: While global geopolitical tensions rise, economists suggest the ongoing conflict could be a “blessing” for Malaysia’s economy, driven by a projected 20% surge in liquefied natural gas (LNG) and palm oil prices.
Economist Prof Emeritus Dr Barjoyai Bardai said Malaysia could benefit from rising global commodity prices, particularly in sectors where the country is already a major exporter.
He said LNG prices could increase by more than 20%, positioning Malaysia to gain from higher export revenues as one of the world’s key LNG suppliers.
Malaysia is also a leading producer of palm oil, and together with Indonesia controls about 85% of the global supply.
“If palm oil prices increase by more than 20%, Malaysia and Indonesia could potentially gain significant benefits due to their dominant position in the global market,” he said when contacted.
Barjoyai further said that Malaysia’s crude oil trade dynamics could also cushion the country from the full impact of rising global oil prices.
He explained that Malaysia exports higher-value sweet crude while importing cheaper heavy crude for domestic use.
“As oil prices rise, both heavy and sweet crude prices will increase, but Malaysia’s export of premium crude helps balance the impact of higher import costs.”
However, he said ensuring continued supply of heavy crude remains a concern, as Malaysia relies on imports blended through offshore trading hubs.
Currently, some of these supplies originate from oil shipments blended at sea involving sources such as Russia, Venezuela, Saudi Arabia and Iran, with sanctions preventing direct purchases from certain producers.
Barjoyai also suggested that Malaysia might increasingly shift its trade focus toward Asian partners, including China, Japan and Taiwan, if geopolitical tensions disrupt traditional Western markets.
According to him, these markets represent a significant portion of global trade and could help sustain Malaysia’s economic activity if trade patterns realign.
At the same time, he cautioned that the global conflict might signal the beginning of another economic downturn as part of a recurring cycle.
Barjoyai said economic history since the 1950s suggests that recessions tend to occur roughly every decade, with the next downturn potentially emerging toward the end of the decade.
“The previous major cycle occurred during the Covid-19 pandemic beginning in 2019, which led to a severe recession in 2020,” he said.
Meanwhile, Centre for Market Education chief executive officer Dr Carmelo Ferlito said Malaysia should also take proactive steps to manage potential disruptions to global trade and shipping routes.
He said improving port efficiency, customs clearance processes and hinterland connectivity will help companies reroute shipments more easily if maritime disruptions intensified.
Ferlito also recommended diversifying suppliers and shipping routes, particularly for energy and key industrial inputs, to reduce exposure to supply shocks.
“Malaysia should strengthen monitoring of freight, insurance and inventory risks because volatility can spread quickly across supply chains,” he said.
In addition, he said economic reforms that reduced reliance on blanket subsidies could help markets adjust more efficiently to changing global price signals while still protecting vulnerable groups through targeted assistance.
