BMI, a Fitch Solutions company, has held a positive outlook for consumer spending in Malaysia over the rest of 2023, as the economic recovery feeds through into strong real consumer spending growth over the full year.
In a note on Tuesday (July 11), the firm forecast household spending to grow by 5% y-o-y over 2023. Easing inflation will feed into our consumer spending outlook over the second half of 2023 (2H2023).
BMI said that at RM866.6 billion (at 2010 prices) for 2023, real household spending has improved beyond pre-Covid-19 levels of RM755.1 billion in 2019.
“Our consumer spending outlook will continue its steady growth as we look toward 2024.
“Real household spending over 2024 will grow 5% y-o-y over 2024, to a total of RM910 billion (2010 prices),” it said.
BMI said consumer confidence levels have largely been steady, reflecting a positive consumer mindset even as inflationary pressures in certain commodities such as food and fuel weigh on low- and mid-income households.
It said the latest data suggest that consumer confidence in Q123 averaged at 99.2, a fall from the 105.3 in the fourth quarter of 2022 (4Q2022) as pandemic effects wane.
Latest retail sales data has also been slowing since June 2022, but remains positive and high at a rate of 12.9% y-o-y in April 2023.
BMI said the slowdown is likely due to the fading of growth boosts from base effects and pent-up demand from the lifting of Covid-related restrictions.
However, it said inflation has also increased over the same period, so growth in retail sales could be partly due to higher prices.
Source: theedgemalaysia