KUALA LUMPUR, Jan. 29 (Xinhua) -- Analysts have foreseen Malaysia's strong consumer spending growth to persist over the year, underpinned by strong economic growth and a stable employment outlook.
BMI, a unit of Fitch Solutions, said in a note on Wednesday that it forecasts household spending in Malaysia to grow by 4.1 percent year-on-year in real terms over 2026, to a value of 975.3 billion ringgit (247.92 billion U.S. dollars), which is well above the pre-Covid (2019) value of 779.7 billion ringgit.
The growth outlook is supported by Malaysia's stable labor market and low inflation, despite a projected short-term uptick.
According to BMI, downside risks remain as high debt levels leave Malaysian households vulnerable to elevated interest rates.
However, it noted that Malaysia's Central Bank's decision to hold the benchmark interest rate at 2.75 percent supports its view that interest rate increases in Malaysia are unlikely over the short term, presenting a stable outlook for consumer debt servicing costs.
Meanwhile, Hong Leong Investment Bank Research said in a note on Wednesday that the Malaysian ringgit, which has appreciated to its highest level since 2018, augurs well for the consumer sector.
According to the research house, the ringgit's appreciation should be broadly positive for corporate Malaysia which is predominantly domestic demand driven -- with import content cost also existing on the other side of the equation. This includes consumer players of imported raw materials/merchandise for staples/retail.
It is noted that the ringgit has been one of the strongest-performing currencies regionally, appreciating 12.8 percent since the start of last year, which outperformed the broader Asia Dollar Index's (ADXY) 3.5 percent gain.
MBSB Research also said in its recent note that consumer spending in Malaysia should remain supportive, anchored by a tight labor market, manageable inflation and continued fiscal backing under the government's economic framework.
"Combined with ongoing job creation and more accommodative financing conditions post-overnight policy rate (OPR) cut, the consumption backdrop remains constructive," said the research house. ■
