The impact of macroeconomic variables on crude palm oil price in Malaysia

Mohamad Isa Abd Jalil and Shariff Umar Shariff Abd. Kadir and Suddin Lada and Joehan Joehari William and Ahmad Aizuddin Hamzah (2025) The impact of macroeconomic variables on crude palm oil price in Malaysia. Malaysian Economic Review, 1. 1 -12.

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Abstract

Crude Palm Oil (CPO) has been a cornerstone of Malaysia's economy for decades, serving as one of the nation's most valuable export commodities. The persistent volatility of CPO prices reflects the inherent uncertainty of commodity markets, necessitating informed decision-making and robust risk management strategies. This dynamic environment requires continued research to unravel the complex relationships between crude palm oil prices and key economic variables, ensuring Malaysia’s palm oil industry remains competitive and resilient in a rapidly changing global market. Thus, this study aims to examine the impact of macroeconomic variables on crude palm oil price in Malaysia. The study employs structural vector autoregressive (SVAR) model, spanning the period from 1971 to 2023. The findings suggest that real GDP positively influences CPO prices, though the response was statistically insignificant. Government expenditure showed a delayed positive impact on CPO prices. The CPI's negative and significant relationship with CPO prices underscores the cost-push effects of inflation. Similarly, the delayed negative impact of interest rates on CPO prices emphasizes the need for careful monetary policy adjustments to support agricultural investment and production.

Item Type:	Article
Keyword:	Crude palm oil, macroeconomics, Svar model
Subjects:	H Social Sciences > HD Industries. Land use. Labor > HD28-9999 Industries. Land use. Labor > HD72-88 Economic growth, development, planning T Technology > TD Environmental technology. Sanitary engineering > TD1-1066 Environmental technology. Sanitary engineering > TD194-195 Environmental effects of industries and plants
Department:	FACULTY > Faculty of Business, Economics and Accounting
Depositing User:	JUNAINE JASNI -
Date Deposited:	08 Aug 2025 07:57
Last Modified:	11 Aug 2025 16:24
URI:	https://eprints.ums.edu.my/id/eprint/44888

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