PETALING JAYA: The consumer confidence index (CCI) has declined for the fifth consecutive quarter since its all-time high after the 14th General Election, as more Malaysians remain apprehensive about job prospects.
At 107 points, Malaysia fell just outside the top 10 most optimistic countries, placing 11th on the index, according to Nielsen.
“In the fourth quarter of 2019,70% of Malaysians believed that the country is in a recession, down slightly from 73% posted in the previous quarter; 37% were optimistic about an economic recovery in the next 12 months, which is higher than 34% in the third quarter of 2019.
“But while recessionary sentiment has reduced, more Malaysians cited the economy as their top concern compared with the previous quarter (44% compared with 39% in the third quarter). Other top concerns included job security (23%), work-life balance (19%), health (16%) and political stability (14%).”
The CCI is driven by three indicators, namely consumers’ perception on local job prospects, personal finances and intentions/readiness to spend.
Reflecting their increased concerns on the economy, Nielsen said Malaysians continued to be cautious with their finances, with a majority of the consumers saying that they have adjusted their spending habits to save on household expenses.
This accounted for 85% of respondents in the fourth quarter of 2019 compared with 82% in the third quarter of the same year, it said.“When asked what actions they are taking to save on household expenses, 57% said they will spend less on new clothes, 50% will cut down on out-of-home entertainment, while 47% will switch to cheaper grocery brands.”
In the statement, Nielsen Malaysia managing director Luca De Nard said local brands and retailers should strive to showcase value for money and appeal to Malaysians’ love for promotions, given that consumers are slightly apprehensive about spending.
“Those who do this successfully will be able to win over consumers in the current climate.”
Since the CCI hit its all-time high in the third quarter of 2018, De Nard said the index’s score has steadily declined to a level that is more realistic and sustainable in the long run.
“Barring any major economic or socio-political event that can adversely affect consumers’ outlook, confidence levels should remain in the positive in the coming months.”
Nielsen said the majority of South-East Asian were optimistic, but not Thais and Singaporeans.
“Consumers in the Philippines (133 points, second place), Vietnam (125 points, third) and Indonesia (123 points, fourth) ranked among the 10 most confident in the world in the fourth quarter of 2019.
“The situation is not the same in Thailand and Singapore, however, where consumer confidence scores are below the baseline of 100, which points to overall pessimism.”
De Nard said while Singapore consumers generally have not been positive about the future for the past couple of years, it added that this was the first quarter that Thailand’s score had fallen below 100 points on the index.
“Thailand’s confidence scores have been steadily declining over the past five quarters, due to events such as the drought and haze, as well as uncertainty surrounding the general election in the first quarter of last year.
“Learning from this, the Malaysian government and private sector should be prepared to address extraordinary events such as the Covid-19 outbreak, which will certainly impact consumer confidence and the overall economy if not contained.”
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