SINCE the enforcement of the movement control order (MCO) on March 18 to curb the Covid-19 pandemic in the country, discretionary spending has dropped tremendously, said AmBank.
In a research note today, it said private consumption growth for 2020 is likely to be at around two to 2.5% compared with 7.6% in 2019.
A survey conducted by the Department of Statistics Malaysia (DOSM) revealed that spending by the T20 segment fell by 59%, followed by the M40 (48%) and B40 (41%).
“The huge fall in the T20’s expenditure was due to the drop in discretionary spending that makes up a huge proportion of their spending, compared to essential goods,” it said.
In the business segments, it said expenditure in areas like clothing declined 94.9%, transport (89%), hotels and restaurants slipped (86.5%), while furnishings, household equipment and routine household maintenance contracted by 72%.
Meanwhile, utilities consumption grew by 50% with no change to education and communication levels as a result of access via online platforms.
AmBank added that household expenditure on food and non-alcoholic items during the MCO has increased by 27.3%.
“With the combination of supply chain disruptions, job layoffs and uncertainties, the outlook for private consumption, which remains as the anchor of growth, will remain weak, largely supported by spending on necessities during the MCO period,” it said. — April 13, 2020, Bernama
