Private consumption expected to be resilient

PETALING JAYA: PublicInvest Research is positive on the outlook for private consumption in , which it expects to continue being resilient, in line with seeing an improvement in Nielsen’s Global Survey on consumer confidence and spending.

This is expected to be supported by factors such as rising wages, full employment and rising commodity prices. The research house has forecast full year private consumption growth to be at 6.4%, before advancing to a year on year (y-o-y) growth of 6.5% next year.

However, it also noted that y-o-y growth projection for private consumption is expected to reach 6.4% in 2017, which is still below its full potential given its 10-year (2007-2016) average growth rate of 6.9%.

Citing the Nielsen survey, which stated that Malaysia’s consumer confidence index in the second quarter of 2017 (Q2’17) hit its highest level since 2015, having risen by 7 points since 2016 to 94 points, PublicInvest opined that this could be a precursor to better consumer spending in the second half of the year.

Consumers may also loosen their purse strings in the absence of major shocks to the economy and spending, which will also be supported by stabilisation of the ringgit.

“A few factors will support consumer spending in the near-term including the expectation of stronger economic growth, the absence of exogenous shocks to the economy, undervalued ringgit and transitory nature of . Reducing negative political news flow could also induce a sense of calm for consumers to spend, be it on non-discretionary or discretionary items,” the research house said.

Source: The Sun Daily

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