PETALING JAYA: While certain sectors are bouncing back, full recovery across all consumer segments has yet to be achieved, economists say, and this is reflected in consumer sentiment.
Malaysia University of Science and Technology economics Prof Dr Geoffrey Williams said the Consumer Sentiment Index from the Malaysian Institute of Economic Research (MIER) was down in Q2 (the second quarter) but recovered in Q3.
Still, it was still not very balanced and not in a region that suggests optimism, he added.
“Generally, consumers remain cautious because the recovery is still under way and not embedded.
“Although we saw very high gross domestic product (GDP) growth all year, this is not feeding down to as many households that still have low incomes and are dealing with a higher cost of living and higher consumer credit conditions.
“So we will see partial recovery coming from richer groups.
“However consumer spending will remain very limited among lower income groups which can include the B50 or even B60 now,” Prof Williams told The Star in light of the upcoming Christmas celebration and year-end holiday season.
Sunway University economics professor Dr Yeah Kim Leng said that consumer sentiment and spending will turn cautious in the face of the worsening global headwinds and a possible economic downturn next year.
Nevertheless, he said Malaysian consumers and businesses are confronting the deteriorating global conditions from a stronger position.
“This is evident in the sharp rise in the country’s inflation-adjusted income, which rose by 9.3% in the first three quarters of this year compared with the same period last year.
“In nominal terms, the income growth is almost double at 17.9%.
“While the income increases are not evenly distributed, there is no doubt that many firms are in a stronger financial position to provide bigger bonuses and salary increments, while households that receive higher salary incomes are able to continue spending for the festive seasons.
“Moreover, the coming festivals will be celebrated under a fully reopened economy and low Covid-19 risk,” said Prof Yeah.
As such, he added that family reunions and social gatherings as well as gift exchanges are expected to exceed the previous year’s celebrations in scale and spending, despite rising prices, given the positive real income increases.
Federation of Malaysian Consumers Associations (Fomca) chief executive officer Dr Saravanan Thambirajah said many people are saving for a rainy day after suffering financial difficulties during the early part of the pandemic and in anticipation of the global recession.
“Many people have started saving, opening bank accounts by having an emergency fund in case of future hardship.
“From our community programmes, there has been an increase among people doing this because they were unable to have any savings due to pay cuts and retrenchment. Some people even lapsed in paying their insurance premiums.
“So basically, they are adapting and learning from experience in anticipation of the future.
“But people will be travelling during the holidays and our advice is to do comparative pricing of items, goods and even travel options,” he added.
Saravanan said there are still those in the small and medium enterprise sector who have gone back to work with pay cuts just so that they can have a steady income coming in.
However, he said things are looking good with the stock market and ringgit faring better.