Household spending to moderate this year: ICAEW

PETALING JAYA: Household spending is likely to moderate this year as debt servicing costs increase in line with the rise in domestic borrowing rates, and fading fiscal support post-election, said the Institute of Chartered Accountants in England and Wales (ICAEW).
However, it said the improving labour market conditions, rising manufacturing wages and the many populist measures announced in the 2018 budget should continue to support household spending this year.
According to ICAEW's latest Economic Insight: South-East Asia Report, Malaysia is expected to see broad-based and resilient growth, backed by domestic demand and healthy investment spending.
This year, ICAEW said Malaysia’s gross domestic product (GDP) is expected to grow at 5.2%, easing slightly from a 5.9% close in 2017 on the back of slightly tighter credit conditions and moderation in export growth.
It anticipates the domestic demand to remain the mainstay of the country’s growth this year, noting that the outlook for investment spending is also healthy.
For the first three quarters of 2017, Malaysia recorded a 12.3% growth in private investment, almost triple that of average annual growth from 2012 to 2016.
Meanwhile, ICAEW said the export sector staged an impressive recovery, noting that with the signing of the CPTPP, Malaysian firms will be provided with preferential access to 10 markets accounting for 13% of global GDP. However, this positive development is dampened by news that the European Union plans to ban the use of palm oil in motor fuels from 2021.