Consumer sentiment may improve further thanks to feel-good factor
KUCHING: Consumer sentiment may improve further in the near term thanks to a feel-good-factor as Malaysia has reached a broad Covid-19 coverage, therefore leading to full economic openings henceforth, analysts project.
According to the Malaysian Institute of Economic Research (MIER), the Consumer Sentiment Index (CSI), at 101.7 for the third quarter of 2021 (3Q21), has exceeded the optimism threshold after three years. MIER highlighted that notwithstanding the still high inflationary outlook, financial and employment expectations are beefing up consumer shopping plans in the coming months.
The research arm of Public Investment Bank Bhd (PublicInvest Research) gathered that the CSI surged to above the neutral level for the first time since 3Q18 after jumping by 37.4 points to reach 101.7 in 3Q21, one of the index’s sharpest jumps since 2Q20.
“Sentiment was lifted by improving prospects following gradual economic re-openings and improving Covid-19 situation,” PublicInvest Research recapped.
“Sentiment was also boosted by massive fiscal efforts to boost output which was reflected in successive rolled-out of eight stimulus packages worth RM530 billion (39 per cent of gross domestic product), the largest for the country for any crisis.
“This was further soothed by the government’s commitment to create massive employment which had already exceeded 400,000 in 3Q21, a driver for the gradual drop in unemployment level (August 2021: 4.6 per cent).
“Sentiment was also helped by the government’s resolve to keep Malaysia safe thanks to massive vaccination roll-outs - the fastest in Asean (500,000 per day).”
The research arm added that consumer sentiment was further pushed by unprecedented fiscal measures that were proconsumption, including the Employee Provident Fund (EPF) withdrawal schemes (i-Citra, iLestari) and option for opt-in loan moratorium worth RM80 billion.
“Sentiment may improve further in the near term thanks to a feel-good-factor as Malaysia has reached a broad Covid19 coverage (95 per cent adult population vaccination; 75 per cent total population), therefore leading to full economic openings henceforth.
“Sentiment will also be driven by pro-consumption initiatives in the Fiscal Budget 2022 which among others will create about one million jobs, sustain cash aid to vulnerable groups (B40, disabled, unemployed) apart from an impressive Development Expenditure (DE) that will see a year on year (y-o-y) growth of 21.9 per cent to RM75.6 billion, the largest for the nation.
“Overall, sentiment will also be pushed by bright growth prospects following a sharp economic turnaround expected in 2022 (PIVB: up 6.1 per cent y-oy) that will drive output to finally exceed pre-crisis levels.”