After oil shock, political strife grips Malaysia

(CNBC) – The current prime minister is now almost a dead man walking.

Malaysia has suffered a rocky start to 2015 with lower oil prices and sharp currency depreciation weighing on the crude exporting economy. Now, experts anticipate political trouble amid speculation the country’s leader may resign.

Over the weekend, former leader Mahathir Mohamad demanded that current Prime Minister Najib Razak step down to “save the country” and ensure the survival of the United Malays National Organization (UMNO), the ruling political party that both Razak and Mohamad are members of. Mohammed was Malaysia’s longest-serving Prime Minister from 1981 to 2003 and despite being retired, he remains a powerful figure within UMNO whose opinions carry significant weight, analysts say.

“The fact that [Mohamad] has come out so strongly, I think the current prime minister is now almost a dead man walking. It’s the end of his tenure,” Hans Vriens, managing partner at corporate advisory firm Vriens & Partners, told CNBC on Monday.

“What’s interesting is that this is the third time that Mahathir has acted on his anointed successor…It seems very difficult how Razak will survive this battle,” Vriens added. In 2009, Mohamad turned against his handpicked successor Abdullah Badawi following weak election results, which propelled Razak to power.

Global investors have been monitoring Prime Minister Razak’s efforts to rein in Malaysia’s current-account deficit, seen by the implementation of a goods and services tax this month, so any change in party leadership could have an impact on capital outflows.

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