PETALING JAYA: Geopolitical risks stemming from the US-Iran conflict and oil price shocks may be driving more Malaysians to holiday closer to home, even as households remain financially squeezed; however, there are few signs of economy-wide distress, economists say.
Malaysians spent RM34bil on domestic tourism in the first quarter of 2026, up 15.8% year-on-year, while the number of domestic visitors rose 7.2% to 74.7 million, according to the Statistics Department.
Sunway University economics Professor Dr Yeah Kim Leng said the strong growth in domestic holidays could be partly attributed to geopolitical risks arising from the US-Iran conflict and subsequent oil price shocks, which disrupted the shipping and aviation industries.
At the same time, he said a sizeable portion of M40 and T20 households were increasing leisure consumption, reflecting income growth as well as greater emphasis on work-life balance and healthy living.
However, Prof Yeah said the spending also pointed to an uneven distribution of economic gains, with some segments of the B40 continuing to struggle despite the 5.4% increase in national income in the first quarter.
“Despite rising cost of living, it is a healthy sign for the economy that consumers are not cutting on local travels and holidays,” he said when contacted yesterday.
CME chief economist Alvin Desfiandi similarly cautioned against interpreting the tourism boom as evidence that Malaysians were no longer struggling financially.
“I think financial stress exists, but it is not yet economy-wide household distress,” he said.
Alvin said while inflation stood at 1.9% year-on-year in June, households could experience cost-of-living pressures differently due to spending on necessities, rent, food, transport, childcare, healthcare and debt repayments.
He said financial indicators nevertheless suggested broad, albeit uneven, resilience, with household loan impairment at 1% at end-2025 and the median debt-service ratio on outstanding household loans at 33%.
However, he said household debt remained high at 84.8% of GDP, which could constrain disposable income and consumption over time.
Alvin also pointed out that tourism expenditure grew more than twice as fast as visitor numbers in the first quarter, implying average spending per recorded visitor increased by about 8%, from roughly RM426 to RM455.
But he cautioned that the 74.7 million figure represented visits rather than 74.7 million distinct individuals, while spending could be financed through income, savings, credit or by substituting domestic trips for overseas holidays.
“So holidays should not be treated as a simple ‘revealed preference’ that Malaysians are not struggling,” he said.
