Although many anticipate that the plunge in crude oil prices may cause a global economic downturn, some economists say Malaysia will not be significantly affected.

"We are not moving towards an economic downturn despite sentiment for global economic growth being clouded by concerns over the US interest rate hike and slowdown in China's economy," said Institute for Democracy and Economic Affairs chief executive Wan Saiful Wan Jan.

He said the country had been depressed by external factors including low oil prices for two to three years now and thus was not expecting things to get worse.

In the Malaysian context, our country is still considered attractive to investors even though the degree of appeal might be smaller.

The country is still registering growth despite the fact that it is not growing as fast as we want, but not declining very badly either.

"We are recovering from an economic downturn," he told Bernama.

Meanwhile, Affin Hwang Investment Bank vice-president and retail research head Datuk Dr Nazri Khan Adam Khan said a global economic turmoil was unlikely to occur as falling oil prices were due to an oversupply situation and not because of under-demand.

Although the price war has sparked a sell-off in international equities, it will only have a significant impact on the economies of big oil producers such as Saudi Arabia, Iraq and Russia.

Investors are called to contravene the plunge in oil prices and accumulate stocks for medium-term gains, given that Malaysia is no longer being a major oil producer.

We need to understand that Malaysia is not a significant oil exporter like 10 years ago. In fact, the government has already reduced its dependency on oil revenue from 40% to 20%.

"So I think if oil prices go down, it should not impact our economy adversely, but of course the sentiment will be slightly affected in the short term," he said.

Nazri said the country's fundamentals were still intact and was optimistic that the Bursa Malaysia Composite Index would recover close to 1,800 points.

"We have the goods and services tax to offset falling oil prices and our private consumption is still strong," he added.

For Malaysian Rating Corporation Bhd chief economist Nor Zahidi Alias, the downward pressure on crude oil prices was anticipated in view of the upcoming production from Iran which would already add to the global glut.

But bad news from China further magnified the uncertainties in the global economy, he said.

As for Malaysia, stability in crude oil prices is critical to its fiscal performance in 2016. It is fortunate that GST revenue, which will likely be more than expected, can help buffer the drop in overall government revenue in 2016.

"Based on our estimates, an average crude oil price of mid-thirties may lead to an increase in budget deficit by approximately 60 basis points if not accompanied by any reduction in government expenditures," he said.

He said however with some cutbacks in operating expenditure, the deficit would not likely increase significantly.

In addition, based on past experiences, development expenditure would not likely be fully utilised given around 93% rate of utilisation in the past four years.

"Should this trend continue, the budget gap may only edge up slightly. The risk, however, lies in the actual growth of nominal gross domestic product (GDP), which may turn out to be lower than government's forecast of 6.8% for 2016," he said.

Specifically, Nor Zahidi said, slower expansion in nominal GDP growth would exert some pressure on budget deficit and Malaysia's total debt.

"Overall, we foresee a downward bias on Malaysia's headline growth if crude oil prices do not rebound in the second half of this year."

However, major crude oil forecasters such as the Organisation of Petroleum Exporting Country (Opec) and International Energy Agency are anticipating lower world liquid surplus by year-end due to the expected reduction in the production by non-Opec members.

At the same time, shale production is expected to shrink further this year due to the cutback in spending by its players.

This may help improve the sentiment slightly in the second half of this year, Zahidi added.