Consumer Spending to Grow in 2022: Fitch

Fitch Solutions Country Risk & Industry projects Malaysia’s consumer spending to post good growth over 2022, with real household spending to grow 5.1% y-o-y. It is said that this is a notable improvement from the 0.5% growth estimated for 2021, as impacts from Covid-19 continued to weigh on domestic demand.

“This recovery in consumer spending over 2022 will come as the wider economy recovers, with growth mainly driven by private consumption and fixed investment in 2022.  At RM768.1billion over 2022, real household spending will be 1.8% higher than the RMR754.6billion posted in 2019, the pre-Covid-19 environment.

On inflation outlook, since the start of 2021, inflationary pressures have been rising in many countries globally, as base effects, higher commodity prices and supply-chain challenges create localised shortages.

It said that it believes that rising consumer price inflation is a key risk to consumer spending over 2022, as it has the potential to erode purchasing power.

“In Malaysia, inflation has been ticking upwards, going from -0.25% y-o-y in January 2021, to 3.3% y-o-y in November 2021 (latest available data). We believe this rate will remain elevated over 2022, forecast to end the year at 3.0% y-o-y. Our Country Risk team does foresee the Bank Negara Malaysia hiking rates over 2022, to 2.25% by the end of the year,” It said

On household debt, it said that Malaysia has experienced a household credit boom over the past few years. “At last estimate, the Bank Negara Malaysia puts household debt at 74.4% of GDP. While this is slightly down from 76.4% in 2020, nominal figures still remain significantly high,” it said.

Previous articleXL Axiata Partners With MoEngage To Deliver Personalised Digital Experiences In Indonesia
Next articleTPM, Huawei, And TM To Drive Tech Commercialisation Via MRANTI


Please enter your comment!
Please enter your name here