Malaysia records the lowest consumer confidence index in SEA

(marketingmagazine.com.my) – The Malaysian consumer confidence ended 2016 on a gloomy note as the index dipped five points from third quarter to 84 percentage points (pp), according to the latest Nielsen Global Survey of Consumer Confidence and Spending released today by Nielsen.

Chart 1: Nielsen Consumer Confidence Index – Malaysia vs. Global (2010 – 2016) [%]

Source: Nielsen Global Survey of Consumer Confidence & Spending Intentions, Q4 2016

In the latest online survey, confidence levels in Southeast Asia continue to remain high with four out of six countries in the region scoring above the 100 pp mark, Singapore and Malaysia being the exception. The Philippines (132 pp, unchanged from last quarter), Indonesia (120 pp, -2), Vietnam (112, +5) and Thailand (110 pp, +2) retain their titles as the top 10 most confident countries globally while Singapore scored 86 pp (-8 from previous quarter). Globally, Malaysia ranked 37th most confident country in Q4 2016 (down 7 spots from last quarter). The average global consumer confidence is 101 pp (+2 pp versus last quarter).

Chart 2: Nielsen Consumer Confidence Index, Southeast Asia vs. Global (2016) [%]

Source: Nielsen Global Survey of Consumer Confidence & Spending Intentions, Q4 2016

“Malaysia now has one of the lowest consumer confidence ratings in Southeast Asia, which does not bode well for local demand in the country for 2017. With such low confidence level, we cannot expect consumer spending levels to move positively for the next six months. As such, I believe that consumer spending will remain flat at best.” said Richard Hall, Country Manager of Nielsen Malaysia

The Nielsen Global Survey of Consumer Confidence and Spending Intentions, measures consumer confidence, perceptions of local job prospects, major concerns and spending intentions amongst more than 30,000 respondents with Internet access[1] in 63 countries. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism. Within a country, period-to-period movements of seven points or more are considered statistically significant.

CAUTIOUS SPENDING AMONGST MALAYSIAN CONSUMERS

Whilst consumers in Southeast Asia remain to dominate the world’s top 10 when it comes to channeling any spare cash into savings after covering essential living expenses, only 59% of Malaysians would do so compared to 65% in previous quarter (10th place globally on depositing extra spare cash into savings). Consumers in Vietnam retains its first spot (76%) followed by Indonesia in third (71%), Singapore in fifth (65%), the Philippines in sixth (64%) and Thailand in eighth (63%). The global average of consumers putting spare cash into savings is 50% (-2% from l
ast quarter).

As Malaysian consumers focus on building their savings, they are also tightening their belt when it comes to big ticket indulgent. Only about a third of Malaysians would go on vacations/holidays (30% versus 45% last quarter). The survey also revealed an overall cautious spending amongst Malaysian consumers in Q4 2016 with decline in spending on new clothes (21%, -15% from previous quarter), new technology products (13%, -7%), home improvements/decorating (13%, -5%) and out-of-home entertainment (16%, -3%).

Chart 4: Top 10 areas where Malaysian consumers are spending their spare cash (2016) [%]

Although about two in five respondents continue to pay off debts, credit cards and loans with any spare cash (41%, +1% from previous quarter), there has also been a slide among respondents putting in any spare cash into retirement funds (19%, -7%) and investing in shares of stock or mutual funds (28%, -6%). Interestingly, at least one in 10 Malaysians say they do not have any spare cash after covering essential living expenses (11%).

“Limited spare cash seems to be a key factor for Malaysian consumers and with their increased concerns on rising prices, they obviously feel that they have less money to save or spend on non-essential items.” observed Hall.

In view of the increasing general cost of living in the country, Malaysian consumers continue to be prudent about their spending habits. About nine in 10 respondents have said that they have changed their spending habits to improve household savings in the past 12 months (88%, +2% from last quarter). Over half of Malaysians continue to spend less on new clothes (58%) and out-of-home entertainment (55%) while at least one in two Malaysian consumers have switched to cheaper grocery brands (51%) in the past year to save on household expenses.

Chart 5: Top 10 actions Malaysian consumers have taken to improve household savings in the past 12 months (2016) [%]

However, should economic conditions do improve, at least one quarter of Malaysian consumers say they will continue to cut down on out-of-home entertainment (29%), spend less on new clothes (28%) and switch to cheaper grocery brands (27%).

FMCG SECTOR GROWTH FLAT IN Q4 2016

The Fast Moving Consumer Goods (FMCG) sector registered a small increase in Q4 2016 with a growth of just 1.4% compared to the same quarter in the prior year. However, all FMCG super categories recorded a positive growth except for Beverages which saw a decline of 3.9%. Health & Wellness logged the biggest growth (13.4%) followed by Personal Care (5.5%), Household (5%), Snack & Confectionery (2.7%) and Grocery (0.9%).

“The FMCG market was static in Q4 after two quarters of growth which was driven by market adjustment following the GST implementation in 2015. This lower single digit growth level can be expected to continue into 2017 as we see consumer confidence take another dip in Q4 2016.” notes Hall.

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