Malaysia's Household Spending Projected to Rise to RM903.8 Billion in 2023

Malaysia's household spending is expected to increase to RM903.8 billion in 2023, driven by positive wage growth that is supporting consumer purchasing power, according to recent projections. Despite interest rate hikes by the central bank, Malaysia's domestic economy has remained strong, with private consumption rising by 4.2% year-on-year in the fourth quarter of 2023 and the overall economy expanding by 3.9%.

The Department of Statistics Malaysia (DOSM) released the Malaysian Economic Indicators Leading Coincident Lagging Indexes for February 2024, which showed the annual growth rate of the Leading Index (LI) continuing its increasing momentum, registering a 2.0% increase to 112.7 points in February 2024 compared to 110.5 points in the same month of the previous year. This positive growth for three consecutive months reflects an optimistic economic outlook for the second quarter of 2024.

The annual performance of LI was supported by the rise in the Bursa Malaysia Industrial Index (28.0%) and the Real Imports of Other Basic Precious Other Non-ferrous Metals (9.9%). The monthly performance of LI recorded a 0.4% increase in February 2024, backed by the Number of Housing Units Approved (0.4%) and Real Imports of Semi-Conductors (0.2%).

The smoothed growth rate of the LI for February 2024 returned above the 100.0 points trend after 16 months below the trend, illustrating an uptick in forward-looking anticipation of Malaysia's economy underpinned by continued domestic growth and household spending. The Coincident Index (CI), which reflects the current economic situation, maintained its positive growth of 1.9% to 124.2 points in February 2024 compared to 121.9 points in the same month of the previous year.

Why this matters: The projected increase in household spending and positive economic indicators in Malaysia signal a resilient domestic economy, despite global economic challenges. This bodes well for consumer confidence and overall economic stability in the country.

However, the automotive sector in Malaysia has experienced a slowdown, with new vehicle sales falling 10% to 71,052 units in March 2024 from a record high a year earlier. The Malaysian Automotive Association (MAA) expects the market to weaken further in April due to the annual Hari Raya holidays and forecasts total vehicle registrations to fall 7% to 740,000 units in 2024, including 59,200 hybrids and 14,800 battery electric vehicles (BEVs).

Malaysia's inflation rose 1.8% in March 2024, unchanged from the previous month, with the index points at 132.2 against 129.9 in March last year. On a quarterly comparison, the country's consumer price index (CPI) increased 0.7% as compared to 0.2% in the fourth quarter of 2023. The increase was primarily due to the Food & Beverages and Restaurant & Accommodation Services segments, which both recorded increases of 3% respectively in March 2024.

Key Takeaways

• Malaysia's household spending to reach RM903.8B in 2023 due to wage growth.
• Leading Index grew 2.0% in Feb 2024, reflecting optimistic economic outlook.
• Coincident Index grew 1.9% in Feb 2024, indicating current economic stability.
• Auto sales fell 10% in Mar 2024, expected to weaken further in Apr 2024.
• Malaysia's inflation rose 1.8% in Mar 2024, driven by food and accommodation.