January 29, 2014
By Sathish Govind
KUALA LUMPUR: The deteriorating confidence in consumer sentiment and business conditions is only to be expected with rising prices and the anticipated further increase in prices, economists said.
They, however, add that consumer and business sentiment should improve, once the uncertainty in price increases in toll, water and petrol are made clearer and if the increases are not that drastic.
They were commenting on the Malaysian Institute of Economic Research (MIER) consumer sentiment quarterly report which showed that Consumer Sentiment Index (CSI) fell for the first time below the 100-point demarcation line in almost five years.
At 82.4 points, the MIER’s CSI for fourth-quarter of 2013 (4Q13) plunged a hefty 36.3 points from the same period last year and 26 points quarter-onquarter.
MIERS’ business conditions survey report also said that Business Condition Index (BCI) extending its declining trend, standing at 92 points in the final quarter, representing 6.6 points slide from the previous quarter.
RAM Holdings Bhd chief economist Dr Yeah Kim Leng said while the consumer sentiment is within expectations, nevertheless, the implementation of the Goods and Services Tax (GST) may propel greater consumer spending ahead of GST introduction in April 2015, which may result in inc reased consumers spending defying consumer sentiment.
Among the highlights of the consumer sentiment report include income expectation being the worst since 1Q09, declining employment opportunities, soaring inflation anxieties and growing concern of getting a job.
The highlights on the business conditions survey report said the sales performance deteriorated further, sluggish domestic orders and lower increase in export orders and a slight dip in investments.
CIMB Group Holdings Bhd chief economist Lee Heng Gui said the consumer spending growth is still robust this year at 6.5% compared to 7.5% last year.
Lee said with the consumer sentiment waning, it is only natural that business confidence also lags behind.
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