Consumer, business sentiments to remain glum in 2017

KUALA LUMPUR: Consumers and businesses continued echoing glum sentiments over economic conditions in 2016 that will prolong into the coming months.
The Malaysian Institute of Economic Research’s (MIER) fourth quarter economic outlook for 2016 (Q4’16) unveiled yesterday, recorded a further decline in Business Conditions Index (BCI) and Consumer Sentiments Index (CSI) from the third quarter of 2016.
Both the BCI and CSI remained below the demarcation points of 100 with CSI plunging from 73.6 points in the third quarter (which was the lowest of all time), to 69.8 points, and the BCI going down to 81.2 from 83.9, the report revealed.
MIER executive director Dr Zakariah Abdul Rashid said “BCI and CSI have not been good for the past quarters and going forward for the first quarter of 2017 will not be as good as well.”
Surveys in the report found that consumers expressed their pessimism over their finances in the near future after being hit by factors such as income falling to the years lowest as at Q4’16, fears over rising prices, insufficient jobs and bleak employment outlook.
On the business front, while overall sales and production are trending higher, it is likely to drop lower in the next quarter. External demand also dipped further and was weaker than anticipated while domestic demand is expected to grow for 2017.
Despite dismal reflections in the BCI and CSI, Zakariah said overall trade performance for 2016 was still good.
MIER also forecasted that the gross domestic product is set to increase this year to 4.5% from 4.2% in 2016.
The average headline inflation for 2016 was at 2.1% but is expected to rise this year due to high consumer spending trends.
Last year also saw a rise in unemployment rate, but Zakariah said Malaysia’s unemployment rate of 3.5% is still not negative.
While housing and retail sectors were softer in 2016, the automotive sector performed well and tourism industry remained stable.
Crude oil prices are expected to ease up this year, while private investments are expected to be on moderate levels whereas the ringgit’s standings is uncertain as it depends on the strength of the US dollar.