June 15, 2024

New Malaysia Times

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AmBank forecasts private consumption to grow 2-2.5 per cent in 2020


KUALA LUMPUR, April 13 – Since the enforcement of the movement control order (MCO) on March 18 to curb the COVID-19 pandemic in the country, discretionary spending has dropped tremendously but private consumption growth for 2020 is likely be at around two to 2.5 per cent compared with 7.6 per cent in 2019, said AmBank in its research note today as reported by BERNAMA.

A survey conducted by the Department of Statistics Malaysia (DOSM) revealed that spending by the T20 segment fell by 59 per cent, followed by the M40 (48 per cent) and B40 (41 per cent).

“The huge fall in the T20’s expenditure was due to the drop in discretionary spending that makes up a huge proportion of their spending, compared to essential goods,” AmBank said.

In the business segments, it said that expenditure in areas like clothing declined 94.9 per cent, transport down by 89 per cent, hotels and restaurant slipped by 86.5 per cent, while furnishings, household equipment and routine household maintenance contracted by 72 per cent.

Meanwhile, utilities consumption grew by 50 per cent with no change to education and communication levels as a result of access via online platforms.

Increase in household expenditure on food

AmBank also added that household expenditure on food and non-alcoholic items during the MCO has increased by 27.3 per cent.

“With the combination of supply chain disruptions, jobs layoffs and uncertainties, the outlook for private consumption, which remains as the anchor of growth, will remain weak, largely supported by spending on necessities during the MCO period,” AmBank said further.