PETALING JAYA: Amid the global economic slowdown, there are concerns that flagging consumer sentiment is a key risk for the manufacturing sector.
InterPacific Securities Sdn Bhd head of research Pong Teng Siew said there will be some impact seen, particularly when taking into account that Chinese New Year last year was in February.
“Some of the business activities that would have continued in January last year would have stopped a little earlier this year ahead of the holiday, and that would show up as slower year-on-year activities in the business sector this year,” he said.
The Malaysian Institute of Economic Research (MIER) said in a report that the domestic economy is increasingly dependent on household spending at a time when demand in other sectors is slowing, especially manufacturing which is hit by weak exports caused by the global slowdown.
“For consumer spending to gather steam, the job markets and/or the wealth effect of rising stock prices will have to show clear signs of vigour before any lift in overall demand can be expected.
“But both have remained lacklustre so far, and this protracted period of market softness has dissipated the wealth effect on spending,” MIER said.
It noted that consumer spending needs more muscle to help boost the economy.
“Should consumer shopping plans be translated into actual spending, it would certainly render the economy some help moving forward.”
However, the economist said consumer-related sectors are usually recession-proof.
“Glove, healthcare and pharmaceuticals are likely beneficiaries amid the outbreak,” she said in her email.
Some of the growth drivers for the sector going forward could be the pickup in crude palm oil prices, an uptick in manufacturing investments and the revival of infrastructure mega projects, Pong noted.
