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Uptrend in Consumer Confidence in Malaysia Stabilised in Q1

Travel News Asia Latest Travel News Podcasts Videos Thursday, 26 May 2011

The uptrend in the consumer confidence in Malaysia stabilised to an index point of 105 in the first quarter of 2011, recording the first correction since the fourth quarter of 2009, according to the latest Global Consumer Confidence Index survey conducted by The Nielsen Company.

Online consumers in Malaysia were generally more upbeat about their job prospects despite the slight change in consumer confidence. 72% of online respondents described their job prospects as excellent or good over the next 12 months, compared to 70% in the previous quarter. Across the Asia Pacific region, the average was 66%.

Malaysia also surged to the 4th place globally (up from 6th in Q4 2010) in terms of consumer optimism about their job prospects in Q1 2011. The positive response mirrored the good news on Malaysian exports which hit a record of RM64.1billion in March 2011, driven by the growth of shipments of goods including electrical and electronics as well as commodities (refined petroleum products and palm oil).

“The relatively flat Consumer Confidence Index in Malaysia reflects consumers' lingering concerns about inflation and potential possible price increases, sentiments which are also shared by some other markets in the Asia Pacific region such as Vietnam, China and New Zealand,” said Kow Kuan Hua, Managing Director of The Nielsen Company Malaysia. “However, consumers are still spending, albeit a little more cautiously. Our analysis shows that sales of most FMCG (Fast Moving Consumer Goods) categories still posted positive growth rates in the first quarter of 2011, similar to those seen in 2010. Private consumption is also on an upward trend due to continued income growth and favourable labour market conditions, and the positive effects arising from these were seen in the country’s first quarter GDP result.”

Malaysia’s first quarter 2011 Gross Domestic Product (GDP) results shown private consumption rose by 6.7% year-on-year. Increased private sector investments and government consumption were also key drivers behind the 6.6% growth in overall domestic demand. It is believed that the projects under Economic Transformation Programme would also boost the business confidence and sustain the strength of private investments which have also led to the optimism towards job prospects moving forward.

As a result, Malaysians were more positive towards the recovery of the economy. 55% of online consumers surveyed felt that the nation is not in an economic recession, compared to 49% a quarter ago. 27% of respondents who believe the country is still in recession anticipated that the recession would last for another 12 months. The improved sentiments amongst its netizens have positioned Malaysia as the 9th most optimistic country globally in terms of consumer’s economic outlook.

Even as the stronger Ringgit increased their purchasing power when travelling overseas or when making purchases via global internet sites, Malaysian consumers seemed concerned that inflationary pressures, rising food and fuel prices and potential interest rate hikes would reduce their disposable incomes. Malaysia’s Consumer Price Index rose 3.2% year-on-year in April 2011 driven by higher food and transportation prices. As a result, there was a 3-percentage point decline in the number of online consumers who rated the state of their personal finances as excellent or good, quarter-on-quarter.

The state of the economy remained the top concern for Malaysian consumers (14% vs. 17% in Q4 2010). Frequent reports on the impact of climate change and the aftermath of natural disasters in the Asia Pacific region have fuelled rising fears of food shortage, prompting 12% of online consumers to cite increasing food prices as their second biggest concern (up 2% quarter-on-quarter). Concerns about sharp increases in food prices trumped economy as the biggest concern for netizens globally for the next 6 months. This was also the biggest concern for 2 in 10 netizens across Asia Pacific.

Overall, Malaysian consumers remained their cautious spending stance. 34% (down from 38% in Q4 2010) of online respondents felt that the next 12 months would be the right time to buy things they want and need. Even though fewer online consumers are changing their spending patterns to save on household expenses (79 % vs. 83% in Q4 2010), consumers claimed to have further cut down expenses on new clothes (66%), out-of-home entertainment (56%), utilities (53%), holiday (44%) in first quarter of 2011. In addition, more online consumers said they have switched to cheaper grocery brands (50%) to increase their disposable income this quarter.

After paying off essential living expenses, Malaysian generally are still great savers. 6 out of 10 consumers in Malaysia will put their spare cash into savings. Malaysia ranked 2nd (41% of online consumers) and 6th (33%) globally when it comes to paying off debts/credit cards/loans and investing in shares/mutual funds respectively. To catch up with the latest technological trends, 28% of online respondents also claimed they spent more money on new technology products in the first quarter of 2011, up 4%age points from the previous quarter.

The Global Consumer Confidence Index across 51 markets rose 2 index points to 92, driven by record confidence gains in the Middle East/Africa following social and political unrest in the region and the strong-performance Asia Pacific economies. At the Asia Pacific level, consumer confidence jumped 10 index points from last quarter to hit a record high of 107. 7 out of the top 10 optimistic countries hailed from Asia Pacific.

The Survey

The Nielsen Global Online Survey was conducted between 23 March and 12 April 2011 and polled more than 28,000 consumers in 51 countries throughout Asia Pacific, Europe, Latin America, the Middle East, Africa and North America. The sample has quotas based on age and sex for each country based on their Internet users, and is weighted to be representative of Internet consumers and has a maximum margin of error of ±0.6%. This Nielsen survey is based on the behavior of respondents with online access only. Internet penetration rates vary by country and Nielsen uses a minimum reporting standard of 60% Internet penetration or 10M online population for survey inclusion.

See recent travel news from: Travel News Asia, Confidence, Malaysia, Nielsen

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