Malaysia risks facing multiple crises

SHAH ALAM — Malaysia could be heading towards a double or even triple crisis if global economic pressures arising from ongoing conflicts are not handled effectively.

Economist Associate Professor Dr Mustazar Mansur said the current crisis differed from past crises, such as the 1998 financial crisis caused by market speculation or the 1973 oil crisis involving energy supply shortages.

He said the present situation was more complex as it involved overlapping factors, including the impact of trade wars between major powers, the Covid-19 pandemic and disruptions in fuel supply chains.

“This time, the situation is more challenging because the global economy has not fully recovered after facing a trade war between two major countries, the United States and China.

“In addition, the economy has been affected by tariffs and we have only just passed the Covid-19 pandemic about six years ago. So, recovery is still incomplete.

“Now, the fuel crisis is more serious, not only due to prices but also insufficient supply caused by disruptions in the Strait of Hormuz,” he told Sinar.

Mustazar warned that without proper management by governments, the situation could escalate into multiple crises, placing heavy strain on the economy.

He said fuel supply disruptions not only affect prices but also create ripple effects across multiple sectors, including logistics, agriculture and retail.

He said when fuel costs rise or supply is disrupted, it impacts the price of goods, transportation costs and ultimately places the burden on consumers.

“Inflation is expected to rise as traders pass on these costs, especially if subsidies are not fully enjoyed by all parties,” he said.

At the same time, economic growth may slow as consumers cut back on spending and businesses take a more cautious approach to investment.

“This will also impact the property sector and development projects, as industry players become more careful in their decisions,” he said.

In this regard, Mustazar stressed the role of the government in balancing fiscal and monetary policies to ensure economic stability.

He said the government must manage its deficit carefully, while the central bank should adjust interest rates in line with current conditions to balance inflation and growth.

“This responsibility does not lie solely with the government — consumers and traders must also spend wisely and make decisions based on actual needs,” he said.

However, Mustazar remained optimistic that Malaysia can overcome these challenges, provided that the measures taken are appropriate and effective.

“The country has gone through various crises before and managed to overcome them. With cooperation from all parties, we can endure and recover,” he added.