PETALING JAYA: Malaysian Rating Corp Bhd (MARC) estimates that average monthly household excess income grew at a slower pace of 6.6% in 2016 from a cyclical high of 7.7% in 2013.
“Similarly, on an inflation adjusted basis, the growth of monthly household excess income moderated to 6.6% during the same period, down from an average of 7.1% in the three-year period through 2015,” the rating agency said in a note today in response to the recent statistics on household income and expenditure.
MARC said consumers have been cautious in their spending habits amid a challenging economic environment as well as rising costs of living.
“Not surprisingly, private consumption growth has been subdued, averaging at 6.3% between 2014 and 2016, down from 7.5% in the preceding three-year period.”
Malaysia’s median and mean household incomes continued to grow, benefiting from the relatively resilient domestic economy. In particular, the median monthly household income grew 6.6% per annum on a compounded annual growth rate (CAGR) basis between 2014 and 2016, in line with the average nominal gross domestic product (GDP) growth of 6.5% during the period.
Similarly, the mean monthly household income rose by 6.2% per annum on a CAGR basis in the same two-year period.
Nonetheless, both the median and mean monthly household incomes growth have slowed from the pace recorded in the previous survey (11.7% and 10.3% respectively in the 2012-2014 survey). Both measures were also lower than the increases recorded in the survey during the 2009-2012 period.
MARC said this slower pace can be possibly attributed to the challenging domestic and global economic environments post the global financial crisis, collapse in international crude oil prices, depreciation of the ringgit as well as weaker global trade performance during the period.
However, it said more importantly, the incidence of poverty has declined significantly, with the poverty rate slipping further by 0.2 percentage points to 0.4% from 0.6% in 2014, which can be attributed to income transfers from the government, which directly benefited the B40 income group.
From a regional perspective, it said Malaysia has done a relatively credible job in improving overall income disparity, with a lower Gini Coefficient than some advanced economies such as Singapore (0.458) and Hong Kong (0.539).
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