Malaysia's Q4 2018 Consumer Confidence Dips
- At 118 points, consumer confidence is down 9 points versus Q3 2018, but up 24 points versus Q4 2017.
- The economy, job security, debt and work-life balance are top concerns.
- Majority of Malaysians have a positive outlook on their personal finances and job prospects
Malaysia has placed seventh globally on the Consumer Confidence Index (CCI), with an index score of 118 points in Q4 2018. While there is a nine-point decrease from the previous quarter, the country has still posted the biggest year-on-year gain among the 64 countries measured, up 24 points versus Q4 2017, according to The Conference Board Global Consumer Confidence Survey, which is produced in collaboration with Nielsen.
The CCI is driven by three indicators, which are consumers’ perception on local job prospects, personal finances and intentions/readiness to spend. While consumers are slightly less optimistic on their personal finances compared to last quarter, perception on local job prospects and intentions/willingness to spend remain stable:
- 70% of Malaysians believe the state of their personal finances in the next 12 months will be excellent or good (versus 77% in Q3 2018, 52% in Q4 2017)
- 71% have a positive view on their job prospects in the next 12 months (versus 75% in Q3 2018 and 47% in Q4 2017)
- 53% say that “now is the time to buy the things they want and need” (versus 58% in Q3 2018 and 33% in Q4 2017.
“This is the fourth consecutive quarter that Malaysia’s CCI score has been above the 100 mark, highlighting Malaysians’ optimism on the country’s economic outlook in 2018,” says Anil Antony, Executive Director of Consumer Insights, Nielsen Malaysia. “While we experienced an all-time high in confidence in the third quarter of the year, consumers are starting to have a more realistic view of the economy and state of their finances, particularly as the excitement following a historic election tapers off and life under the current government becomes the new normal.”
Economy a top concern, recessionary sentiment still high
The economy continues to rank as the top concern among Malaysians (37% versus 38% in Q3 2018), followed by job security (19% versus 21%), debt (18% versus 11%) and work-life balance (18% versus 20%).
Approximately two in three consumers still believe that Malaysia is in a recession (69%, in-line with Q3 2018); of this, only 44% are optimistic that the economy will recover in the next 12 months (down 8% quarter-on-quarter).
Commenting on recessionary sentiment, Antony said: “The percentage of consumers who believe the country is in a recession is much lower than the levels seen in 2017 and 2016. The weakening of the Ringgit against the US Dollar in the fourth quarter may be why fewer people are optimistic for an economic recovery in the next 12 months”.
Malaysians big savers
Four in five Malaysians (84%) say that they have adjusted their spending habits to save on household expenses. Actions taken to control expenses include spending less on new clothes (52% versus 39% in Q3 2018), cutting down out-of-home entertainment (50% compared to 35% in the previous quarter) and switching to cheaper grocery brands (41% compared to 32% in Q3 2018). When economic conditions do improve, less than a third intend to continue saving on these items.
After covering the cost of essential living expenses, consumers say that they channel their spare cash towards their savings (62%), paying off debt, credit cards or loans (35%), and holidays (34%).
The Conference Board Global Consumer Confidence Survey, in collaboration with Nielsen, measures perceptions of local job prospects, personal finances and immediate spending intentions among more than 32,000 respondents with Internet access in 64 countries. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism.