The Malaysian consumer confidence remain stable at the start of the first quarter of 2016 with 79 percentage points (pp) (dipping one point from previous quarter), according to the latest Nielsen Global Survey of Consumer Confidence and Spending Intentions.
In the latest online survey, confidence levels in Southeast Asia continue to remain resilient with four out of six countries in the region scoring above the 100 pp mark. The Philippines (119 pp, +2 pp from last quarter), Indonesia (117 pp, +2), Vietnam (109 pp, +1) and Thailand (105 pp, -9) are the bright spots in the region’s growing and emerging market as they retain their titles as the top 10 most confident countries globally while Singapore scored 88 pp (-6).
Globally, Malaysia held on to its ranking as 36th most confident country in Q1 2016 (unchanged from last quarter). The average global consumer confidence is 98 pp (-1 pp from previous quarter). Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism.
“With no real changes in the economic outlook, Malaysians’ confidence remains low and we see that this trend will continue to be the case until the pressure on the Ringgit ease. Only when the pressure of the Ringgit improves, can consumers start to feel the burden of their day-to-day spending lessen.” said Richard Hall, Country Manager of Nielsen Malaysia.
While the nation’s fiscal status (52% compared to 50% in prior quarter) continues to top the list of major concerns among Malaysian consumers, nearly a quarter of the respondents have cited that job security is now their second top worry (22%). Seven in 10 Malaysians feels that the local job prospects is not so good, even bad over the next 12 months (70% compared to 64% in previous quarter).
Recessionary sentiments among Malaysians continue to remain high (84%, unchanged from last quarter) with only one in five respondents feeling positive that the country will be out of an economic recession in the coming 12 months (22%, unchanged from prior quarter).
For the first time since starting the global online survey on consumer confidence and spending intentions back in 2005, terrorism made it to the nation’s top 10 list of major concerns (7%). Other key concerns that also made the list include increasing food prices (20%), political stability (19%) and work/life balance (14%).
“Despite the fact that none of the economic KPIs indicate that the country is in a recession, consumers continue to believe that the current situation and the future for the country is not positive. To change this attitude will require a step change in the current environment.” observes Hall.
Saving intentions among Southeast Asian consumers continue to be a priority. The region’s consumers are the world’s most avid savers with all six countries securing the top 10 spots globally when it comes to saving. Vietnam (78%) maintains its first ranking followed by Indonesia (75%) and Philippines (69%) in second and third, respectively. Both Malaysia (67%) and Singapore (67%) are ranked fourth while Thailand (66%) takes the sixth spot. On average, only half of global consumers priorities saving any spare cash (51%).
About one third of Malaysians are also focused on building their financial nest by channeling extra cash towards investing in shares of stock/mutual funds (32%) and retirement fund (27%) while two in five respondents use any extra monies to clear debts, credit cards or loans (41%).
While the intent to save is high, Malaysian consumers are also ready to indulge on big ticket items such holidays or vacations (up 4% to 40%), upgrading of new technology products (up 7% to 19%), out-of-home entertainment (up 5% to 18%) and home improvements or decorating (up 2% to 18%) in Q1 2016 as per previous quarter.
The survey also revealed that consumers in Malaysia would continue to reduce household spending even when economic conditions would improve with nearly nine in 10 Malaysian consumers changing their spending habits in the past year to improve saving (88%). The top three areas where consumers in Malaysia will continue to cut back even when economic conditions do improve are spending less on new clothes (65%), reducing out-of-home entertainment (56%) and switching to cheaper grocery brands (51%).
Consumer purchasing power in the Fast Moving Consumer Goods (FMCG) category gained traction in the first quarter of 2016 versus the same quarter in the prior year (4.7%). All FMCG super categories registered a healthier growth lead by Beverage (8.8%), Grocery (4.3%), Household (3.9%), Health & Wellness (2.7%), Snack & Confectionary (2.0%) and Personal Care (1.7%).
“In spite of the FMCG industry having a strong start to last year due to the GST introduction in April 2015, we have been pleasantly surprised to see the majority of categories still in growth, with the modern trade leading the way. While there has negative sentiments surrounding the increasing cost of living, consumers still need to buy groceries and it looks like they are not necessarily down trading their purchasing decisions.” notes Hall.
For more detail and insight, download Nielsen’s Q1 2016 Global Consumer Confidence Report. For a historical look at global consumer confidence by region, country and time period, explore the Nielsen Global Consumer Confidence Trend Tracker.
The Nielsen Global Survey of Consumer Confidence and Spending Intentions was conducted 1-23 March 2016 and polled more than 30,000 online consumers in 63 countries throughout Asia-Pacific, Europe, Latin America, the Middle East/Africa and North America. In Malaysia, the sample size is 516. The sample has quotas based on age and sex for each country based on its Internet users and is weighted to be representative of Internet consumers. It has a margin of error of ±0.6%. 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.