However, Akmal said Putrajaya was closely monitoring the possibility of greater economic pressure in the third quarter if the Middle East conflict and global supply disruptions persist.
“God willing, the second quarter will hold up. But the concern is the third quarter,” he said at his ministry’s monthly assembly today.
“We have managed to push back the impact, but if the conflict continues, the effects will certainly be more strongly felt.”
Akmal said labour market stability was one of the indicators giving the government confidence, but also acknowledged rising costs, with the inflation rate increasing from 1.7% in March to 1.9% in April.
He said transport costs were the biggest contributor to the increase, rising by up to 4.1% last month, along with several other segments, including communications.
Akmal said the current economic challenges were broader than those during the Covid-19 pandemic, as the current crisis began with oil supply pressures before affecting other supply chains.
He said Putrajaya was focused on strengthening the country’s economic structure and improving domestic resilience, rather than relying solely on short-term incentives.
Last week, Nurhisham Hussein, senior director of economy and finance at the Prime Minister’s Office, said June and July were expected to be a major turning point for the economy as businesses exhaust existing raw material stockpiles.
While some alternative sources are available, Nurhisham noted technical challenges such as longer shipping times and compatibility issues with existing manufacturing specifications.
“We’re going to start seeing production stoppages. We’re going to start seeing people losing overtime and shift reductions,” he told BFM.
Malaysia’s GDP grew by 5.4% in Q1 2026, moderating slightly from 6.2% in the previous quarter, according to data released by Bank Negara Malaysia last Friday.
On Tuesday, an international research house said the country’s economy likely reached its growth peak in Q1 2026, with momentum expected to moderate for the rest of the year amid rising geopolitical risks and weaker global demand.
In a research note, BMI Country Risk & Industry Research, a unit of Fitch Solutions, said concerns surrounding the US-Iran conflict could dampen economic activity and investor sentiment in Malaysia.