The war between the US and Iran has caused a widespread downstream impact on global supply chains, creating fresh cost pressures for businesses and SMEs.
Experts and analysts expect the crisis to ease with a potential peace plan in early 2027, followed by a staged recovery before oil supply returns to pre-war levels. In other words, the recovery may take 6 to 12 months, with oil production reaching around 90% of its pre-war capacity by the end of 2026.
The world is now living in a new normal, where commodities affected by the crisis may continue to experience higher and more volatile prices depending on how events unfold. Market stability now hinges largely on the 60-day US-Iran political negotiation.
To appreciate the impact of this crisis on the global and Malaysian economy, here are some key statistics business owners should take note of:
- Global growth has been cut from the forecasted 3.4% in 2026 to 3.1% for the same year. This is still considered modest growth and does not trigger a recession in most regions.
- Malaysia’s CPI is currently at 2% but is expected to range between 2% and 3% this year. For SMEs, this may translate into slightly higher operating costs and tighter profit margins.
As companies brace for the impact of the crisis, here are some practical strategies SMEs can adopt as countermeasures to protect cash flow, defend margins and strengthen business resilience:
- Protect cash flow and liquidity – Ensure that the company has enough cash flow to stay afloat. Perform a sensitivity analysis to understand how cost increases may affect liquidity and profit margins, and assess whether price adjustments or cost-control measures are required.
- Increase productivity and efficiency – Analyse current business processes and identify areas that can be done more productively. Improving operational efficiency can reduce wastage and help offset other cost increases from the supply side.
- Strengthen supply chain management – Analyse weak points in your supply chain and explore alternative suppliers, pricing arrangements or procurement options that may reduce exposure to supply chain risk.
- Increase agility and flexibility – Improve management decision-making efficiency by reducing unnecessary red tape, so the business can respond to market changes with greater speed and flexibility.
Companies should also consider medium-term strategies and how the business can benefit from this crisis through better financial planning, business advisory support and long-term investment decisions:
- Embrace digitisation and AI – Digital tools, cloud accounting and automation can increase productivity, improve financial visibility and reduce time wastage.
- Identify opportunities that arise from this crisis and leverage them – Look for investment opportunities, innovation opportunities and undervalued assets. Market sentiment is cautious now; therefore, there may be opportunities for businesses that have strong cash flow management and a clear strategy.
- Energy transition – For companies directly affected by oil prices due to direct consumption of oil in production, consider an energy transition strategy and explore alternative energy sources.
Final thought on the crisis:
There is a high likelihood that the war will not restart, although there may be occasional minor conflicts between now and the negotiation deadline. The political cost is too high for the USA to continue the campaign. While the Malaysian government has introduced various subsidies to shield the people from inflation due to the conflict, the reminder here is for SMEs impacted by the cost hike to utilise the government aid and financing support made available. For business leaders out there, are you busy surviving? Have you taken a break to search for new business opportunities, strengthen your financial management, or speak to a professional accounting and business advisory firm about your next move?
Interesources Group 