SERC: Escalated oil price boon and bane for Malaysia
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High crude oil prices caused by tension in the Middle East will boost Malaysia's oil and gas exports, but escalate fuel prices and dampen economic growth. The first order effect of higher oil prices will expand Malaysia's trade surplus. However, the second order effect of oil supply shocks will cause rising energy prices, inflation, and dampen consumer spending and investment demand. This will impact Malaysia's exports and result in higher equity risk and downward pressure on stock prices. RHB Investment Bank expects oil prices to reach as high as US$140 per barrel if the Israel-Iran conflict intensifies. The targeted fuel subsidy rationalization will not lead to complete floating of retail petrol prices, but rather a gradual adjustment. The impact of targeted fuel subsidies on headline inflation will be manageable, but there may be indirect impacts on other goods and services. Bank Negara Malaysia is not expected to raise interest rates to address the increase in inflation.

#OilPrice #Malaysia #EconomicGrowth #TradeSurplus #Inflation #ConsumerSpending #InvestmentDemand #StockMarket #FuelSubsidy #InterestRates

https://theedgemalaysia.com/node/708970