PETALING JAYA: The Russian-Ukraine war may have a “muted direct impact” on the Malaysian economy, according to the Socio-Economic Research Centre (SERC).
Its executive director Lee Heng Guie (pic) said this is because Russia only accounts for 0.4% of Malaysia’s trade while Ukraine accounts for 0.1%.
As for the indirect impacts, he said Malaysia could benefit from higher oil prices. However, he said the bloated subsidies of fuel and others may offset oil revenue.
Nevertheless, he said there are some indirect impacts that may stem from the prolonged conflict between the two neighbours, which can be a concern.
He said the conflict may lead to high energy and commodity prices such as wheat, corn, chemicals and fertiliser.
“That will hit us very hard,” Lee said at the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) webinar entitled “Coping with Turbulent Times”.
Apart from that, he said the global financial markets may also experience some volatility which may have spillover effects on the local economy.
“I expect the ringgit to remain weak in the near term,” he added.
He said the war, which has taken place after the Covid-19 pandemic, may trigger a second level of shock.
This could worsen disruption of the supply chain, increase logistics and shipping rates as well as input and raw material cost. The rising business cost may dampen production and margins.
On the flipside, the plantation sector may stand to gain as the European Union may purchase more palm oil due to shortage of grapeseed and sunflower oil, he added.
Russia invaded Ukraine on Feb 24, and the conflict has yet to be resolved.