Consumer sentiment, business condition indexes down in Q4

KUALA LUMPUR: Business condition and consumer sentiment indexes fell below the optimism threshold of 100 points in the fourth quarter of last year, indicating a slowdown in economic growth for the quarter.

This is after the two indexes topped the 100-point mark for two consecutive quarters, when and after the country’s General Election took place.

Malaysian Institute of Economic Research (MIER) emeritus professor Dr Zakariah Abdul Rashid said the consumer sentiment index has declined 10.7 points to 96.8 in October-to-December from 107.5 in the preceding quarter.

He said business condition index, which tracks domestic manufacturing activity, on the other hand dropped to 95.3 points, 13.5 points lower than in the previous quarter.

Zakariah said consumers are looking more warily at the economy and their well-being lately as pessimists outnumbered optimists in the last quarter.

“Not only is consumers’ assessment of present conditions a notch lower, their expectations six months from now are also less vibrant than last quarter, especially their finances.

“With global challenging headwinds continuing to hamper Malaysia’s economic growth and slowing hiring activities in many sectors, consumers’ appetite and plans to shop will necessarily take a backseat in the coming months.

“Pay raises too are not going to look any fatter in the coming months than they are now,” he told a media briefing here.

Zakariah however said business conditions are likely to be somewhat moderate in the next quarter.

“The manufacturers covered in this survey are optimistic that their new business strategies that will be implemented in 2019 will show some positive signs albeit small,” he said.

MIER has forecast Malaysia’s economic growth last year to be much lower than 2017 to 4.7 per cent, to be dragged down by the fourth quarter’s gross domestic product growth.

He also expects a further slowdown in economic growth in 2019 to 4.5 per cent due to slower domestic demand and private consumption growth as well as flat growth in exports from ongoing trade war between China and United States.

“The forecast for 2019 however is still preliminary. Upside risks would be better-than-expected world’s economic growth.

“We have to wait for United States president Donald Trump’s move in the coming months to see if it does any good to Malaysia’s economy,” he said.

Source: NST