KUCHING: A prolonged war involving Iran could create significant uncertainty for the global economy, with Malaysia and Sarawak unlikely to be spared from its far-reaching consequences.
Economic analyst Datuk Peter Minos cautioned that if the conflict continues for an extended period, economic conditions could deteriorate not only in 2027 but also in the years beyond, affecting trade, investment, supply chains and consumer confidence worldwide.
He said one of the biggest questions facing the international community is whether the United States will take steps to end the conflict or allow it to continue.
“Will the United States stop the war it started with Israel? Knowing US President Donald Trump’s erratic and unpredictable behaviour, it is difficult for Iran to negotiate and deal with the US. Much depends on Trump and the United States,” he said.
Minos noted that relations between Iran and the United States have been marked by deep mistrust, making diplomatic efforts increasingly difficult.
He pointed out that on several occasions before Feb 28, Iranian leaders had engaged in negotiations with American counterparts, only for military actions to occur later and agreements to collapse.
“As a result, Iran does not trust the United States. This lack of trust makes negotiations much harder and increases the risk of prolonged instability,” he said.
Despite the challenges, Minos said many countries are still hoping for a diplomatic breakthrough that could bring an end to the conflict.
“We all hope that the Americans will come to their senses, become reasonable, meet Iranian terms and stop the war. The whole world is waiting for that,” he said.
However, Minos warned that even if hostilities cease before the end of this year, the economic impact would continue to be felt well into 2027.
He estimated that repairing war-related damage and restoring confidence in international markets could take between six months and a year.
“Dark clouds will still remain on the horizon. Recovery will not happen overnight,” he said.
Among the issues requiring attention are disrupted supply chains, uncertainty over international currencies, compliance with any peace agreements, humanitarian assistance programmes and the extensive damage caused by military strikes and sanctions.
Closer to home, Minos believes Malaysia will require at least six months to stabilise economic conditions and address emerging challenges.
He said government subsidies and assistance programmes may need to be reviewed to ensure they remain effective in helping households cope with economic pressures.
At the same time, the country faces a busy political calendar, including elections in Johor, upcoming polls in Melaka and Sarawak, and speculation that the next general election could be called before the end of 2026.
“These developments will not make economic repair and improvement any easier,” he said.
Looking ahead, Minos described 2027 as a potentially difficult and worrying period for both the national economy and the wellbeing of ordinary Malaysians.
He urged the public to prepare for possible adjustments in spending, savings and financial planning as the nation navigates an increasingly uncertain global environment.
“The people should know what may lie ahead and be prepared to make adjustments in their finances and lives,” he added.
