Strait Of Hormuz Disruption Implication Greater Than Impact Of US Tariffs
KUALA LUMPUR: The risk of disruption in the Strait of Hormuz is now seen as having greater implications for the Malaysian economy compared to the impact of United States (US) tariffs, given the strategic waterway’s role in global energy trade and international supply chains.
According to BIMB Securities’ second-half 2026 equity strategy note, the ongoing conflict in West Asia and restrictions on the Strait of Hormuz have triggered energy price shocks, disrupted raw material supplies, and increased inflationary pressures on energy-importing countries such as Malaysia.
The research firm said global economic growth for 2026 is projected at 3.1 per cent, lower than the previous year, with a downward revision of 0.2 percentage points following the impact of the West Asian conflict, which has caused energy prices to rise, supply chains to be disrupted, and financial conditions to become tighter.
It said that without the conflict, global growth prospects would actually have been expected to be better, supported by robust technology investments, lower tariffs, and growth-supportive economic policies.
“The biggest risk to the global economy at present is the escalation of geopolitical tensions, which could trigger a larger energy shock, thereby driving up oil and food prices and forcing central banks to maintain tighter monetary policies,” it said.
For Malaysia, Gross Domestic Product (GDP) growth for 2026 is projected at 4.9 per cent, supported by still-robust domestic demand and export performance, which is expected to grow by 8.4 per cent.
However, BIMB Securities warned that growth momentum is expected to moderate in the second half of this year due to persistently high energy prices, possible fuel supply disruptions, slower tourism activity, and tighter fiscal conditions.
The firm also stressed that the US-Iran conflict has a direct impact on the global food system through two main channels, namely rising energy prices and increased fertiliser costs.
It said these pressures stem from damage to energy production infrastructure and the effective closure of the Strait of Hormuz, which is a critical route for global energy trade.
Accordingly, Malaysia’s headline inflation for 2026 has been revised up to 2.4 per cent compared to 1.4 per cent in 2025, driven by external cost pressures and supply chain disruption risks.
BIMB Securities said food prices, housing utilities, and transport are at risk of rising should geopolitical tensions persist, thereby putting pressure on household spending.
At the same time, the country’s distribution trade growth is expected to moderate to 5.4 per cent this year after recording strong performance in the first four months of 2026.
On the capital market front, BIMB Securities expects the second half of 2026 to be influenced by three key factors, namely the US Federal Reserve leadership transition, the China-ASEAN supply chain shift, and delays in infrastructure projects in Europe.
The research firm said fuel price uncertainty following subsidy rationalisation as well as energy supply risks could affect consumer confidence and lead to a reduction in discretionary spending.
According to the report, restrictions on the Strait of Hormuz have resulted in longer maritime shipping lead times and created procurement constraints for critical infrastructure equipment required in technology projects and data centres.
BIMB Securities also stated that companies are now facing pressure to diversify their raw material sources away from dependence on West Asia towards supply networks within ASEAN, China, and India to avoid factory operation disruptions.
Berita Harian