Domestic consumer demand to rebound this year
KUCHING: Domestic consumer demand has been projected to rebound this year despite some disruptions caused by the implementation of Movement Control Orders (MCOs).
According to the research arm of MDIF Amanah Investment Bank Bhd (MIDF Research), Covid19 has stifled domestic demand in 2020 as consumers reduced spending and tighted their purse string due to high uncertainty.
“However, domestic demand are expected to rebound this year despite some disruptions caused by the implementation MCOs which is believed to have lesser economic impact due to its targeted approach and most of the economic activities are allowed to operate,” MIDF Research said.
“Furthermore, consumers are more adaptive to the new normal than before by shifting their purchases online when there is a disruption to offline spending caused by restrictions in place to curb increasing Covid-19 cases in the country.
“The recovery in private consumption will be more evident from the second quarter of 2021 (2Q21) onward as National Covid19 Immunisation Programme has kicked off and vaccination rollout will continue by phases throughout the year besides benefitting from low base effect last year.”
The research arm opined that the low overnight policy rate (OPR) and fiscal stimulus packages with Rakyat-centric measures such as i-Sinar, Bantuan Prihatin Rakyat (BPR), wage subsidy and loan moratorium will continue to provide support to the estimate.
“In particular, blanket withdrawal of i-Sinar could pave way for unaffected or less affected contributors to increase their discretionary spending.”
On another note, MIDF Research highlighted that consumer inflation is expected to go up this year but remain benign and supportive to consumption.
“Services sector in general will also return to positive territory this year but some services involving hotel and aviation are likely to still be pressured by the interstate travel ban and international broder closure.”