As Malaysia grapples with economic blues, poll shows high-income earners feeling richer while middle and low earners feeling poorer

KUALA LUMPUR, Aug 9 — Malaysians who earn a high income are looking forward to becoming richer as the country’s economic outlook looks grim, the Malaysian Institute of Economic Research (MIER) found in its 2022 second quarter consumer sentiment index (CSI) survey.

In contrast, the same survey released yesterday found the spending confidence of most Malaysians in the middle to low income brackets plunging in line with the country’s economic outlook.

MIER’s CSI for the April to June period dipped far below the 100-point optimism threshold to a four-quarter low of 86, losing almost 23 points quarter-on-quarter as more low and middle income households grew increasingly worried about inflationary pressures.

“Consumers gave an unequivocally more downbeat assessment of their near-term finances than their current financial situation, and fewer of them are also expecting the labour market to pick up in the second half of 2022.

“Looking ahead, consumers are set to tighten their purse strings as they become increasingly concerned about their future paychecks,” the think tank said in its quarterly report.

Household finances were generally weaker in the second quarter than from the first three months of 2022.

Close to half of the respondents (47 per cent) did not see any change in their incomes in the second quarter, those who believed that their financial position has worsened lately have risen to a four-quarter high of 39 per cent, the report said.

Better finances were reported by just one of seven respondents, down from 16 per cent last quarter.

“Financial expectations are at their worst in a year. While a four-quarter low of 17 per cent of the respondents are hopeful that their incomes will improve soon, 43 per cent foresee otherwise, the largest proportion tabulated since 1Q20,” MIER said.

Another 32 per cent believed that their finances will likely remain the same in the coming months, especially the middle-incomers and respondents from the northern region.

Only those in the higher income brackets were optimistic about getting better pay soon, the think tank’s survey showed, while those expecting to be worse off financially in the next quarter are mostly from the low-income group.

Job prospects, while having gained some ground since early 2022 with the opening up of the economy, remains mostly bleak with almost one-third (29 per cent) of the consumers interviewed were of the view that employment opportunities have dissipated in the second quarter of this year.

“Consumers are giving the thumbs down insofar as job expectations are concerned,” the report said.

“Those who believed that employment opportunities will be more promising in the coming months shrank to 32 per cent from 42 per cent a quarter ago, another four-quarter low.” Malaysia could take about two and half years to recover and surpass the pre-Covid-19 output level that prevailed in 2019, an outlook that underscores concerns about the gloomy prospect of recovery as geopolitical tension and supply chain snarls continue to upend growth.

The World Bank in its latest Global Economic Prospects released in June, warned of the numerous risks that could derail the global economic recovery process, which currently seems precarious.

Global growth is expected to slow to 2.9 per cent in 2022 and to edge only to 3.0 per cent in 2023, pointing to a sharper-than-expected reduction in global growth according to the latest forecast by the International Monetary Fund.