Household Spending To Grow In 2022: Fitch Solutions

Household spending in Malaysia to grow by a real rate of 5.1% over 2022, as the consumer recovers from two years of contractions in spending levels.

Fitch Solutions Country Risk & Industry Research says that spending will follow the wider economic recovery, as higher vaccination rates over H122 allow for more localities to lift restrictions that have hampered retail sales.

It says that it highlights several risks to outlook over 2022, especially in Q122, including elevated inflation, and the possibility of new Covid-19 variants, which could lead to the reimposition of Covid-19 related restrictions.

Fitch says that recovery will be rapid enough to total RM915billion (USD218bn) in 2022, building slightly on the figure recorded pre-pandemic (2019).

It says that its consumer spending forecast is in line with our Country Risk view that the wider economy is forecast to grow by 5.5%over 2022.

Malaysia’s economic recovery from the Covid-19 pandemic will be slow, with the country being in a constant state of lockdown for nearly two years.

The domestic demand outlook has weakened considerably, with consumer spending in 2021 likely to be worse than in 2020. Unemployment is likely to rise over H221 and has already started to climb, to 4.8% in June 2021 from 4.5% in May 2021 (unemployment averaged 3.3% pre-pandemic), according to the Department of Statistics.

Industries Unite, an association of 115 Malaysian businesses, warned in early July 2021 of impending mass unemployment if lockdowns were to persist. The serious outbreak will also set back any plans to reopen to international travel, dashing any prospects of tourism and other related sectors beginning to recover in 2021.

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