The rating agency said in a statement that based on the Statistics Department’s latest household income and basic amenities survey (2016), Malaysia’s average and median household incomes benefitted from the relatively resilient domestic economy.
It noted that the average monthly household income rose by 6.2% per year on a compounded annual growth rate (CAGR) basis between 2014 and 2016.
The median monthly household income, meanwhile, grew by 6.6% per year on a CAGR basis in line with the average nominal gross domestic product (GDP) growth of 6.5% during the period.
More importantly, MARC said, the incidence of poverty had fallen significantly, with the poverty rate slipping further by 0.2 percentage point to 0.4% in 2016.
“To a certain extent, this can be attributed to income transfers from the Government which directly benefitted the B40 income group,” it said.
“Adding to the positives is the overall income distribution which has also improved, albeit marginally. This is reflected by the country’s Gini coefficient of 0.399, down from 0.401 registered in the preceding two-year period.”
From a regional perspective, Malaysia has done a relatively credible job in reducing overall income imbalance, with a lower Gini coefficient than some advanced economies such as Singapore (0.458) and Hong Kong (0.539).
On how the 2016 monthly household income compares with the previous years’, MARC said both the median and mean monthly household incomes growth had slowed from the pace of 11,.7% and 10.3%, respectively, recorded in the previous survey.
Both measures were also lower than the increases recorded in the survey during the 2009-2012 period, it said.
“This slower pace can be possibly attributed to the challenging domestic and global economic environments post the global financial crisis (GFC), collapse in international crude oil prices, depreciation of the ringgit as well as weaker global trade performance during the period,” the agency said.
“It is also notable that the median income growth in rural areas fell 8.5 percentage points to 5.3% per annum in 2014-2016 from a high of 13.8% recorded in the 2012-2014 period.”
Alongside the latest release of Malaysia’s household expenditure survey, MARC estimated that the average monthly household excess income grew at a slower pace of 6.6% last year from a cyclical high of 7.7% in 2013.
Similarly, on an inflation adjusted basis, the growth of monthly household excess income moderated to 6.6% during the same period, down from an average of 7.1% in the three-year period through 2015.
“This has reinforced our view that consumers have been cautious in their spending habits amid a challenging economic environment as well as rising costs of living. Not surprisingly, private consumption growth has been subdued, averaging at 6.3% between 2014 and 2016, down from 7.5% in the preceding three-year period,” MARC said.