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Wednesday, 30 April 2014
CUTTING BACK: At 92 points in the Nielsen survey, Malaysian consumer sentiment level in Q1 2014 is below the global average of 94, and far from the bullish atmosphere in Indonesia which, at 124 points, is the highest in the world.
KUALA LUMPUR: Consumer confidence in the country has taken a hit as Malaysians continue to worry about the economic outlook, food prices and job security this year, according to a Nielsen survey.
Malaysia saw the region’s largest decline in confidence between the fourth quarter of 2013 and the first three months of 2014, declining six index points to 92. This is two points below the global average of 94 points, says the latest Nielsen Global Survey on Consumer Confidence and Spending Intentions.
In contrast, Indonesia’s confidence index score remained the highest globally at 124 points in Q1 2014, while the Philippines scored 116, followed by Thailand at 108, Singapore and Vietnam at 99 points each.
“It is interesting that the well-known political challenges have had hardly any effect on Thai consumers, who remain generally optimistic about their financial situation,” Luca Griseri, head of Nielsen’s financial services in Singapore and Malaysia.
Griseri said the negative sentiment was driven primarily by rising fuel and grocery prices due to the reduction in government subsidies.”
The Q1 survey, which queried 30,000 respondents with Internet access1in 60 countries, uses a baseline of above and below 100 points to indicate optimism and pessimism
Compared to the last quarter, 39% of Malaysians cited the economy as their main concern (up 4 percentage points), followed by 21% who are worried about rising food prices (down 2 pp) in the coming six months.
Job security remained in third position with a slight dip to 20% (down 3 pp).
Malaysian consumers are also concerned about their health (up 5 pp to 16%) and increasing utility bills (up 3 pp to 14%) as compared to previous quarter. On the contrary, concern surrounding debt (down 6 pp to 13%) and crime (down 5 pp to 13%) registered a decline versus last quarter.
Consequently, saving intentions among consumers in Malaysia continue to increase, with more than three in five consumers saving their spare cash in Q1 2014 after covering essential living expenses (up 1 pp to 64%).
In addition, Malaysians have cut back on expenses for home improvements (down 4 pp to 14%) and basic out of home entertainment (down 2 pp to 16% versus previous quarter) in an effort to rein in household expenses.
“Malaysian consumers’ reaction to concerns about the economy is to save more and spend less on discretionary items, to prepare for a possibly worsening economic climate. If these intentions materialise, they could have a negative effect on the economy,” Griseri noted.
Consumers in Malaysia also said they would continue to reduce household spending even when economic conditions would improve in order to increase saving.
The five areas they intend to continue cutting back are 1) gas and electricity (41%), 2) purchase of new clothes (28%), 3) out-of-home entertainment (28%), grocery (cheaper brands, 26%) and telephone expenses (21%).
“Despite Malaysian consumers’ tendency to save for a rainy day, it is interesting to note that they are still willing to spend on holidays,” Griseri noted.
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