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Malaysia’s Consumer Confidence Stays in the Top 10!

Nielsen LogoKuala Lumpur. Malaysia maintains its position in the top ten most consumer confident countries among the countries measured despite seeing a decline of six points in the index to 105 in the third quarter of 2012 from 111 three months ago according to the latest global online consumer confidence findings from Nielsen, a leading global provider of information and insights into what consumers watch and buy (Chart 1).

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The Nielsen Global Online Consumer Confidence Survey, established in 2005, tracks consumer confidence, major concerns and spending intentions among more than 29,000 Internet consumers in 58 countries. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism.

Malaysia reported the ninth highest consumer confidence index score (ahead of Switzerland) among the 58 countries surveyed. Indonesia and India are both at the top (119), followed by The Philippines (118). Malaysia ranked fifth in second quarter 2012.

Despite having inflation grow at its slowest pace in the month of September as well as having the Gross Domestic Product (GDP) grow by 5.4 percent in second quarter, the third quarter Consumer Confidence Index in Malaysia actually decreased by six points due to the drop in optimism based on job prospects as well as personal financial status,” said Richard Hall, Managing Director for Nielsen Malaysia.

“Although domestic conditions remain stable consumers may have increasing concerns that external demand and investments may not be as resilient as expected and the economic situation in Europe, North America and the slowing down of demand in China may be contributing to the decline in optimism.”

Optimism towards local job prospects and personal finances drop

The percentage of online respondents in Malaysia who rated their job prospects as excellent and good over the next 12 months is at 65 percent despite a drop of five percent quarter-on-quarter; three out of ten (31%) described it as “not so good” or “bad”(Chart 2). Malaysia has the sixth highest ranking on job prospects among the 58 countries surveyed.

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Overall, confidence level (excellent and good) towards personal finances in the coming 12 months experienced a seven percent quarterly decline. Seven percent of consumers surveyed online described their state of personal finances as excellent as compared to ten percent a quarter ago (Chart 3). As a result, Malaysia was out of the top ten list this quarter among all countries surveyed.

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Consumers split on recessionary mindset

Consumers are split between saying the country is in a recession or not. Half (51%) of the online consumers surveyed felt that the nation is in an economic recession, half (49%) said that Malaysia is not in recession. Slightly more than a quarter (27%) of the respondents projected that the recession would last for another 12 months. In addition, four out of five (80%) consumers have changed their spending patterns to save on household expenses and this can be seen in spend on FMCG2 sales in Malaysia over the last quarter.

FMCG sales during fasting period and Raya festive month lower than expected

Despite the peaks of purchase resulting from the Hari Raya festivities, celebrated by a large majority of the country’s population, the total Fast Moving Consumer Goods (FMCG) tracked by Nielsen also showed a year-on-year decline of 3.1 percent and 2.4 percent in sales value during the fasting period and the festive month respectively (July and August 2012). Only 36 categories experienced positive growth in July and August.

“The trends suggest that consumers are spending cautiously and holding back spending amid global economic uncertainties. On the other hand, Nielsen’s survey reveals that they have increased both their contribution to savings and retirement funds (increased by three and five percent respectively),” said Hall. “Pre-budget sentiment may have also contributed to the slowdown in growth on a year-on-year basis. Consumers are deferring spending especially on discretionary items such as major durable goods while waiting for people-friendly incentives or measures which are scheduled to be tabled before the close of the third quarter.”

Economy, job security and political stability remain top concerns

Nearly one-fifth (18%) of online consumers indicated that the state of economy is still their biggest concern. Consumers remained concerned about job security (14%) and political stability (11%) while work/life balance and debt followed closely (Chart 4). Concerns over worries of increasing food prices maintained its sixth position as inflation grew at its slowest pace in the country in the months of July-September in 2012.

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Consumer Confidence Charts
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