The Malaysian consumer confidence index for Q3 2015 slipped to a 10 year low of 78 percentage points (pp) (compared to 89 pp from previous quarter), according to Nielsen's latest Global Survery of Consumer Confidence and Spending Intentions.
On the contrary, confidence levels in Southeast Asia remain relatively high with five out of six countries in the region scoring above the 100 pp mark, Malaysia being the exception. The Philippines (117 pp), Indonesia (116 pp), Thailand (111 pp) and Vietnam (105 pp) are among the top 10 most confident countries globally while Singapore scored 100 pp. Globally, Malaysia is ranked 43rd most confident (slipped from 24th place from previous quarter). The average global consumer confidence is 99 pp.
"The Consumer Confidence Index (CCI) score for Malaysia decreased 11 percentage points in the third quarter to a score of 78 - the lowest score in Nielsen's 10 year CCI history since we started the global online survey on consumer confidence and spending intentions back in 2005." said Richard Hall, Nielsen Malaysia's Country Manager. "This has been mainly driven by consumers increase in concerns on the economic outlook, the declining value of the ringgit and increasing concerns over the country's political stability."
While the economy remains Malaysian consumer's key concern with over three in five respondents being worried about the nation's financial conditions (61% versus 43% in previous quarter), about a third of the respondents have said political stability is now second most worrying (34%, an increase from 13% in last quarter) followed by job security (18%, down from 19%) and increasing food prices (reduced to 14% from 22%).
Moreover, 89% of Malaysian consumers think that the nation is currently in an economic recession with nearly four in five respondents who thinks or feel unsure if the country will be out of an economic recession in the next 12 months (78%, up 1% from previous quarter). Two thirds of Malaysians also feel that local job prospects are not so good, even bad in the coming year (66%, up 13% from last quarter).
"In Malaysia, the currency devaluation of at least 25% has potentially impacted the general perception of the economic strength of the country, while the actual impact in terms of rising prices due to import costs has not yet hit the consumers' pockets," observes Hall. "The concern over rising food prices that were prevalent in the second quarter due have subsided and political stability is now the second highest concern as recent high profile demonstrations and political headlines dominate the media."
Southeast Asian consumers remain the world's most avid savers, with over two thirds of the region's consumers funneling spare cash into savings. Vietnamese continue to rank first when it comes to saving the extra cash (78%) followed by Indonesians in second place (74%). Joining the top 10 countries globally in savings includes the Philippines (5th, 67%), Singapore (6th, 66%), Malaysia and Thailand (tied on 7th, 64%). On average, only 52% of global consumers set aside any spare cash for savings.
While Malaysian consumers continue to concentrate on keeping their spare cash in savings, about a third of Malaysians are also using extra monies to invest in stocks and mutual funds (33%) and retirement fund (28%). Over two in five Malaysians are paying off debts, credit cards and loans with any unutilized money (45%). Conversely, Malaysian consumers are not shy about indulging in big ticket items such as holidays and vacations (42%), out-of-home entertainment (19%) and new technology products (18%).
Malaysian consumers are becoming more frugal and cautious about their spending habits in view of the increasing general cost of living in the country. Nearly nine in 10 Malaysian consumers have changed their spending habits in the past year to increase household savings (88%). About two thirds of Malaysians have reduced their spending on new clothes (63%) while move than half of the consumers have tried to save on gas and electricity (52%) and switching to cheaper grocery brands (51%) in an effort to improve household savings in the past 12 months.
"There seems to be limited scope for optimism as far as consumer confidence is concerned. At present, the real concerns for Malaysians are economic worries and job security. If the ringgit continues to remain at a low, then we foresee that consumer confidence will remain at its current level going forward." said Hall.
Insights contained in this article are based on results from the Nielsen Global Survey of Consumer Confidence and Spending Intentions, Q3 2015 survey.
The Nielsen Global Survey of Consumer Confidence and Spending Intentions was conducted Aug. 10 - Sept. 4, 2015 and polled more than 30,000 online consumers in 60 countries throughout Asia-Pacific, Europe, Latin America, the Middle East/Africa and North America. In Malaysia, the sample size is 541. The sample includes Internet users who agreed to participate in this survey and has quotas based on age and sex for each country. It is weighted to be representative of Internet consumers by country. Because the sample is based on those who agreed to participate, no estimates of theoretical sampling error can be calculated. However, a probability sample of equivalent size would have a margin of error of ±0.6% at the global level. This Nielsen survey is based only on the behavior of respondents with online access. Internet penetration rates vary by country. Nielsen uses a minimum reporting standard of 60% Internet penetration or an online population of 10 million for survey inclusion. The China Consumer Confidence Index is compiled from a separate mixed methodology survey among 3,500 respondents in China. The sub-Saharan African countries in this study are compiled from a separate mobile methodology survey among 1,600 respondents in Ghana, Kenya and Nigeria. The Nielsen Global Survey, which includes the Global Consumer Confidence Index, was established in 2005.