‘HOUSEHOLD SPENDING MAY REACH RM904B’
BMI says growth will be positive compared with 2023 as consumption levels normalise
BMI, a Fitch Solutions company, has maintained a cautious yet optimistic view on consumer spending in Malaysia for 2024 as the economic recovery feeds through to strong real consumer spending growth over the full year.
BMI said household spending growth will be more positive, relative to last year, as economic growth persists and consumption levels normalise.
“We forecast household spending to grow by 5.0 per cent yearon-year for 2024, in real terms, to a value of RM903.8 billion at 2010 prices.
“Household spending over 2024 will mark the return to preCovid-19 levels of growth. Household spending grew at a real average rate of 5.2 per cent year-onyear during the 2015-2019 period,” it said in a statement yesterday.
BMI said spending will be constrained by an environment of high debt levels and its servicing costs.
However, easing inflation and a tight labour market will support spending, as real wage growth returns to positive territory, supporting purchasing power over
the year.
BMI said consumer confidence levels have largely been declining, reflecting a weakening consumer mindset as inflationary pressures in certain commodities, such as food and fuel, continue to weigh on low- and midincome households.
Its latest data suggest that consumer confidence in fourth quarter of last year averaged at 89.4, an increase from the 78.9 in the previous quarter.
“This is still one of the lowest consumer confidence figures in
Malaysia since the second quarter of 2022 when it hit 85.9 with the average consumer confidence in the country between 2005 and 2023, averaging 96.5.
“Latest retail sales data has also been slowing since June 2022. Although February 2024 latest data available retail sales came in at 5.8 per cent year-on-year, which is a five-month high, this came after the 2.6 per cent year-on-year recorded in January 2024 which was the latest growth in retail sales since September 2021.”
BMI said the larger slowdown
trend is likely due to the fading of growth boosts from base effects and of pent-up demand from the lifting of Covid-19-related restrictions.
While February figures have proven to be optimistic, the longevity of this recovery will require further monitoring.
Meanwhile, BMI said a high level of household debt remains a risk to Malaysia’s consumer outlook, as it not only constraints future borrowing capacity but impacts current disposable income levels.