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THE Economy Ministry has warned that the full impact of the worsening global supply crisis is likely to become more severe by the third quarter of this year, with mounting pressure expected on inflation, industrial operating costs, employment and household spending despite the country’s stronger-than-expected economic growth.
Economy Minister Akmal Nasrullah Mohd Nasir said the government was intensifying nationwide monitoring and intervention measures as geopolitical instability and disruptions to global energy supplies continued to drive uncertainty across international markets.
Speaking during a special briefing following the 11th National Economic Action Council (MTEN) meeting for 2026, Akmal said Malaysia’s economy remained resilient but acknowledged that external pressures could gradually spread deeper into domestic industries and consumer markets.
“The national economy remains on a strong footing and continues to demonstrate resilience amid an increasingly challenging global environment,” he said.
He stressed that the effects of global supply disruptions “may not occur immediately” but could unfold progressively through rising prices, industrial costs, labour market pressures and household expenditure.
“The government will continue implementing targeted interventions so that the rakyat are not left to face these pressures without appropriate support,” he said.
Malaysia’s gross domestic product expanded by 5.4 per cent in the first quarter of 2026, surpassing the earlier official estimate of 5.3 per cent.
According to Akmal, the stronger performance was supported by resilient domestic demand, solid growth in the services and manufacturing sectors, stronger private investment activity and continued increases in foreign tourist arrivals.
He noted that Malaysia’s first-quarter performance exceeded several major regional economies including Singapore, which recorded growth of 4.6 per cent, the Philippines at 2.8 per cent and China at 5.0 per cent.
However, Malaysia remained behind Vietnam, which expanded by 7.8 per cent, and Indonesia at 5.6 per cent.
The minister also said labour market conditions remained stable, with unemployment holding at 2.9 per cent, which he described as effectively full employment.
Nevertheless, he cautioned that the third quarter of 2026 could become a major stress point for the economy as the global supply crisis increasingly filters through production chains and business operations.
“Impacts from the global supply crisis are expected to become more visible in the third quarter of this year, particularly on price stability, industrial operating costs and the labour market,” he said.
Akmal revealed that Brent crude oil prices climbed 3.5 per cent between May 5 and May 15, rising from US$106.16 to US$109.85 per barrel amid geopolitical uncertainty and fears over global oil supply stability.
During the same period, Brent crude fluctuated between US$105.62 and US$112.15 per barrel, reflecting continued market sensitivity to geopolitical risks and energy demand expectations from major Asian economies.
Liquefied natural gas prices also rose modestly by 1.7 per cent to US$17.71 per MMBtu, while coal prices declined slightly by 1.3 per cent to US$131.50 per metric tonne.
Despite global uncertainty, Akmal said Malaysia’s financial markets had thus far remained orderly and stable.
The FBM KLCI closed at 1,740.22 points on May 15 compared with 1,748.06 points a week earlier, representing a relatively modest decline of 0.4 per cent.
“This shows investor sentiment remains cautious, but there has not been any sudden market disruption,” he said.
On inflation, the minister disclosed that Malaysia’s consumer price index rose to 1.9 per cent in April 2026 from 1.7 per cent in March.
Although inflation edged higher, he stressed that Malaysia’s inflation rate remained comparatively moderate against regional peers including the Philippines at 7.2 per cent, Vietnam at 5.5 per cent, Indonesia at 2.4 per cent and South Korea at 2.6 per cent.
The increase was driven primarily by transportation costs, which accelerated sharply from 1.6 per cent in March to 4.1 per cent in April following significant increases in fuel prices.
Average diesel prices in Peninsular Malaysia rose to RM5.92 per litre from RM4.12 previously, while RON97 climbed to RM5.06 from RM4.03.
Akmal added that inflation in the communications and information sector also increased due to higher subscription fees for pay television and mobile phone postpaid services.
However, he said essential sectors such as food and housing remained relatively stable, indicating that inflationary pressure had not yet spread broadly across all household spending categories.
The government has meanwhile continued targeted support measures to ease cost-of-living pressures.
Akmal confirmed that the BUDI MADANI Diesel subsidy assistance of RM300 monthly would continue, alongside an additional interim RM100 payment for eligible recipients.
The government also began disbursing the RM300-per-hectare Ploughing Incentive for paddy farmers on Tuesday to offset rising agricultural operating costs linked to fuel prices.
During the MTEN meeting, the Federation of Malaysian Manufacturers presented findings from a survey involving 225 companies across 29 manufacturing subsectors.
The survey found mounting pressure from raw material shortages, higher logistics costs, cash flow strain, export competitiveness challenges and difficulties maintaining employment.
The five manufacturing subsectors identified as most severely affected were automotive and components, food and beverages, plastics and packaging, chemicals and petrochemicals, and electrical and electronics.
Akmal warned that small and medium enterprises were particularly vulnerable because of their limited financial capacity to absorb prolonged cost increases.
“If this situation is not managed effectively, it could affect national output, export performance, future investment and household income,” he said.
To cushion the impact, the government has expanded targeted financing support through Bank Negara Malaysia’s RM5 billion SME Stabilisation Relief Facility, aimed at helping affected businesses manage cash flow and operational continuity.
Additional financing guarantees are also being provided through Syarikat Jaminan Pembiayaan Perniagaan Berhad across multiple sectors, including manufacturing.
The minister further revealed that more than 398,000 vehicles had registered under the Subsidised Diesel Control System (SKDS) as of April 9, involving over 375,500 goods transport vehicles and approximately 23,000 public transport vehicles.
MTEN is now reviewing adjustments to diesel subsidy quotas to strengthen anti-leakage controls without disrupting business operations or supply chains.
Akmal said the government had already convened 10 MTEN meetings throughout the crisis period, with 24 policy papers covering 13 economic sectors discussed so far.
A total of 96 policy decisions have been recorded, with 11 completed and 78 currently being implemented.
“This shows the government’s approach is not reactive in nature. The response is continuous through weekly monitoring, cross-ministerial coordination and implementation reviews to ensure every decision is translated into immediate and effective action,” he said.
Akmal stressed that the government’s priorities remain focused on safeguarding food, energy, medicines and essential supplies while containing price increases and exploring new opportunities in biodiesel, sustainable fuels and alternative energy sources.
“We cannot fully control global oil prices or geopolitical conflicts. But we can control the country’s preparedness, policy precision, implementation effectiveness and fairness in distributing assistance. That is the government’s focus at this time,” he said. - May 19, 2026
