Lower income households vulnerable to economic shocks

KUALA LUMPUR: Low income households in Malaysia remains vulnerable to economic shocks and emergencies due to low savings, a study by Khazanah Research Institute (KRI) found.

According to the non-profit research outfit of Khazanah Nasional Bhd, lower income households spent nearly 95% of their incomes on everyday expenditure, particularly on necessities, leaving them vulnerable with little savings against economic shocks or emergencies.

“On average, households with income levels below RM2,000 spent 95% of their income on everyday essentials and those earning below RM5,000 have cut back on household food consumption,” KRI said in a statement during the launch of its latest “State of Households” report here today.

“On the other hand, households with income above RM5,000 spent more on recreational activities, cultural services and did consumed outside of their homes,” it added.

Meanwhile, KRI noted that despite the improvement in income inequality and declining poverty rates, poverty in the country is still rampant.

“While absolute poverty rate has been steadily declining, it is estimated that an additional of about one million households live in ‘relative poverty’ in 2016 compared to two decades ago,” it explained.