Malaysia is starting to see the economic impact from the Middle East conflict across several sectors, with disruptions expected to deepen in the coming months.

The number of workers who lost their jobs rose 21% to 7,057 in April from March, Economy Minister Akmal Nasrullah Mohd Nasir said at a briefing on May 25. While the job cuts were worse in January and February, “this development deserves attention,” he said. Malaysia’s unemployment rate stood at 2.9% in the first quarter.

In the aviation industry, daily aircraft movements in April declined 31.5% following the cancellation of some Middle Eastern routes, Akmal said. Meantime, international air cargo handling fell 14.3%, while domestic air cargo fell 18% following a surge in fuel costs and airline operational adjustments.

Trading volume in the agricultural sector declined 14.7% in the first quarter, with a drop in exports across major commodities, including cocoa, rubber, palm oil, pepper and timber, the minister said. He added that exports in the sector are set to shrink by about 13.5% this year, while imports will likely decrease by about 3.3%. 

Logistics, namely shipping costs to the Middle East, have jumped by 50% to 80%, Akmal said. Plantation and machinery operating costs have increased by as much as 30% and rubber replanting costs have increased by as much as 55%. The cost of producing palm oleochemicals has increased by up to 30%, according to the minister. 

Akmal had warned in mid May that the impact of the global supply crisis on the country is expected to be more pronounced in the third quarter. The economy’s pace of expansion was already softening progressively across the first quarter, with monthly growth easing from 6.8% in January to 5.2% in February and 4.1% in March.