Malaysia placed 10th globally on the Consumer Confidence Index (CCI), with an index score of 110 points in second-quarter 2019. This was a slight dip compared to the 115 points posted in first-quarter 2019 and 117 points in the same quarter last year, according to The Conference Board Global Consumer Confidence Survey, which is produced in collaboration with Nielsen.
This was the sixth consecutive quarter of consumer optimism that Malaysia has enjoyed, underpinned by excitement surrounding a historic election in 2018, which was preceded by 17 consecutive quarters of pessimism since fourth-quarter 2013. While we see declines both on a quarterly and an annual basis, a score of 110 should still be viewed positively, as a majority of consumers continue to be positive on bread and butter issues such as their personal finances and job prospects.
The CCI is driven by three indicators, which are consumers’ perception on local job prospects, personal finances and intentions/readiness to spend. Malaysians’ readiness to spend did not change on a quarterly and annual basis, however perception on job prospects and personal finances declined:
- 63% of Malaysians believe the state of their personal finances in the next 12 months will be excellent or good (vs. 71% in Q1 2019, 69% in Q2 2018)
- 63% have a positive view on job prospects in the next 12 months (vs. 70% in Q1 2019 and 73% in Q2 2018)
- 48% say “now is the time to buy the things they want and need” (in-line with 48% in Q1 2019 and 50% in Q2 2018)
THE Economy still a priority; health IS increasingly a cause for concern
Recessionary sentiment in Malaysia remained high in second-quarter 2019, with 70% of consumers believing that the country is currently in a recession—in line with 69% in the preceding quarter. Among those who think the country is in a recession, more than a third (38%) are optimistic about an economic recovery in the next 12 months.
Kitchen table and lifestyle issues continued to be a priority among Malaysians, with the top five concerns being the economy (38%), job security (20%), work-life balance (18%), health (17%) and debt (16%).
There has been a gradual change in Malaysians’ top concerns over the past three years. While the economy and job security have always been at the forefront of Malaysians’ minds, over the past three years we have seen a steady decrease in concerns surrounding increasing food, fuel and utility prices, which correlates to the low inflation we have experienced recently.
At the same time, Malaysians have become increasingly concerned about the state of their health. This may be attributed to the recent spotlight that has been placed on the rise of lifestyle-related diseases among Malaysians, such as diabetes, heart disease, obesity and hypertension in the public sphere.
This increased focus on health and wellness is reflected in the growth of FMCG sales in the health and wellness category in recent times. In fact, health and wellness was the fastest growing category based on the Nielsen Retail Index in 2018 at 7.8%.
Malaysians limit discretionary spending in order to save
Given consumers’ concerns about the economy and job security, it should come as no surprise that they are prudent when it comes to their finances. In Q2 2019, a vast majority of consumers (87%) said that they have adjusted their spending habits to save on household expenses. They save by spending less on new clothes (48%), trying to save on gas and electricity (44%), switching to cheaper grocery brands (43%), cutting down on out-of-home entertainment (42%) and reducing holidays and short breaks (36%).
When asked what how they spend their money after they have paid for essential living expenses, one in two consumers say that they save their spare cash, while one in three pay off their debt, credit cards and house loans.