Businesses, consumers less optimistic: Survey
KUALA LUMPUR: Businesses and consumers are less optimistic about the Malaysian economy, a survey by the Malaysian Institute of Economic Research (MIER) shows.
MIER’s third-quarter (Q3) Business Conditions Index (BCI) dived 22.5 points to 83.9 points from 106.4 points in Q2 on the back of a slowdown in sales and production, declining local and export orders and rising stock levels.
The Consumer Sentiments Index (CSI), meanwhile, was down by 5 points quarter-on-quarter to 73.6 points in Q3 due to uninspiring employment and financial outlook. This is the ninth consecutive quarter that the CSI has remained below the 100-point threshold level of confidence.
Even though consumers are generally low-spirited about the economy and job prospects, MIER said the decline in the CSI, surprisingly, does not portend any major let-up in spending patterns in the coming months.
A total of 1,020 householders were interviewed for the survey.
Meanwhile, MIER said a plunge in all areas of manufacturing activities led local manufacturers to be somewhat pessimistic.
“A sluggish outlook is expected in the next three months with the Expectation Index (E1), also having lost significantly by 25.9 points to stay at 90.9 points,” it said.
The BCI is an arithmetic average of the proportion of positive responses to eight questions contained in a questionnaire mailed to 300 business organisations.
Even though global prospects are not encouraging, MIER executive director Dr Zakariah Abdul Rashid said, the gross domestic product (GDP) growth forecast is maintained at 4.2% for 2016 as the shortcoming is expected to be compensated by better domestic demand.
“As for 2017, GDP growth is expected to edge up moderately in the range of 4.5% to 5.5%,” he noted.
Nonetheless, Zakariah expects Malaysia’s net exports to continue to be in negative territory for the year with an estimated contraction of 0.5% as external demand remains sluggish. This compares with its earlier projection of a 1.2% rise in net exports.
Zakariah said the downward revision in net exports from 1.2% growth was due to the failure of global recovery to gain momentum as oil prices remained below US$50 (RM209.78) a barrel. The projection, however, is still better than the 3.8% contraction last year.
Although the current account balance is expected to deteriorate this year to 1.8% of gross national income, it will rebound in 2017 in anticipation of improved export demand. -