Consumer confidence in Malaysia rose four points to 107 points in the fourth quarter of 2010 from the preceding quarter to reach its highest level since the third quarter of 2006, according to the latest findings of Nielsen Global Consumer Confidence Index.
“This strong sentiment also positioned Malaysia in the ninth place globally in terms of consumer confidence, along with Saudi Arabia, ahead of Sweden and Vietnam (both at 103), Thailand (102), China (100), Hong Kong and New Zealand (both at 99),” it said.
Nielsen said Malaysia's four-point surge was driven by consumers' improved sentiments towards local job prospects and the state of their personal finances.
It said 70% of online consumers surveyed in Malaysia described their job prospects as excellent or good over the next 12 months.
“This is the highest percentage for the year 2010, up from 63% in the third quarter of 2010. Malaysian consumers also ranked sixth globally in terms of their optimism over job prospects. The average figure was 55% across the Asia-Pacific region,” said the report.
Nielsen noted that although Malaysia registered a moderate 5.3% growth in gross domestic product (GDP) for the third quarter of 2010 amid slowing external demand, it however added that the nation was optimistic about meeting the 6% to 7% GDP growth target for 2010.
“We believe that growth in the private sector will remain relatively robust. The GDP announcement in November 2010 has also boosted consumer confidence in Malaysia, leading to a more positive outlook on local job prospects.”
Despite the number of cash-strapped consumers peaking globally at 14% at the end of 2010 (its highest level on record), Nielsen said the impact was, however, minimal in Malaysia.
It said 63% of the respondents (up 3%) indicated that they were positive about their state of personal finances in the coming 12 months. A stronger ringgit had also raised their purchase power overseas or on the Internet.
Nielsen, however, said although consumer confidence in Malaysia recorded a four-year high in the fourth quarter of 2010, Malaysian consumers were nevertheless still skeptical about the recovery of the economy.
“Slightly more than half (51%) of the online consumers surveyed feel that the nation is still in an economic recession. In addition, three in 10 (30%) of the respondents projected that the recession would last for another 12 months, compared with the average of 23% across Asia-Pacific,” it said.
“This concern is shared by the world consumers with 54% in North America, 56% in Europe and 47% in the Asia-Pacific.”
Nielsen said the state of the economy remained the top concern for Malaysian consumers in the final quarter of 2010.
“Apart from the economy, one of the most pressing concerns is the increase of food prices. Widespread reports on climate changes around the world, which led to fears of food shortage and lower supply, caught the attention of Malaysian consumers.”
Meanwhile, the Malaysian Institute of Economic Research (Mier) in its latest quarterly report said its consumer sentiment index (CSI) rose 7.6 points year-on-year in December 2010 to reach 117.2 points, which was higher than the 115.8 points registered in the preceding quarter.
“The fourth-quarter reading shows a balance between how consumers feel about the future and how they feel right now. Although consumers are looking positively at the next six months, they have better perception of their current situation.
“While this suggests that the economy is back from the brink, this is also a clear sign that consumers are taking it easier when it comes to jobs and incomes now,” Mier said.
At a press conference on its latest quarterly report, Mier executive director Dr Zakariah Abdul Rashid said the overnight policy rate, which currently stands at 2.75%, would not be raised in the first half of 2011.
This would mean that interest rates for consumer loans would not rise, he said.
“Strong employment data will boost the CPI (consumer price index) as consumers gain confidence to spend,” said Zakariah.
Mier in its report also said that “price pressures” were becoming more worrisome.
“The higher food, transport and fuel prices recently are probably expected to account for most of the acceleration in prices in the near time.
“To be sure, consumer spending tends to suffer the brunt of the blow from a hike in such prices and a prolonged increase in these prices could accelerate inflation and hamper growth.”