KUALA LUMPUR, Jan 8 — Malaysia has an economic contingency plan in place if the global trade war worsens, and the same plan can be adopted should the ongoing US-Iran conflict escalate, says Finance Minister Lim Guan Eng.
He said the geopolitical conflict was one of the topics discussed during the Cabinet meeting earlier today, with concerns more over stability and whether it will affect global economic growth.
He said the biggest challenge facing Malaysia following the conflict is to maintain the country’s economic growth.
“It is still too early to tell (the impact of this conflict) while in the meantime, the government can definitely manage (the petrol subsidy should prices spike).
“We hope both countries can come to their senses and not go to war,” he told a press conference after the Inland Revenue Board’s (LHDN) Meet the Customer Day today.
Oil prices jumped significantly last night, with global benchmark Brent crude surging 1.6 per cent to almost US$69 per barrel, due to the US-Iran geopolitical tensions following multiple missile strikes at air bases in Iraq housing US troops.
This came after the killing of top Iranian general Qasem Soleimani by a US airstrike in Baghdad last week.
For every US$1 increase in the oil price, Petronas will get RM300 million more, but it would squeeze the government for a higher petrol subsidy, Lim said.
“We have to pay a higher petrol subsidy, (but) so far the country can manage,” he added.