KUALA LUMPUR – The Consumer Sentiment Index (CSI) surged to above the neutral level for the first time since the third quarter of 2018 (Q3 2018) after jumping by 37.4 points to reach 101.7 in Q3 2021, one of the index’s sharpest jumps since Q2 2020.
Public Investment Bank Bhd (PIVB) said in a note that sentiment was lifted by improving prospects following gradual economic re-opening and the improving Covid-19 situation.
“Sentiment was also boosted by massive fiscal efforts to boost output which was reflected in the rollout of eight stimulus packages worth RM530 billion or 39% of Gross Domestic Product (GDP), the largest for the country for any crisis.
“This was further soothed by the government’s commitment to create massive employment which had already exceeded 400,000 in Q3 2021, a driver for the gradual drop in unemployment level,” it said.
It said sentiment was also helped by the government’s resolve to keep Malaysia safe thanks to massive vaccination rollouts which was the fastest in Asean of about 500,000 per day.
PIVB noted consumer sentiment was further boosted by unprecedented fiscal measures that were pro- consumption, including the Employees Provident Fund (EPF) withdrawal schemes such as i-Citra and i-Lestari and option for opt-in loan moratorium worth RM80 billion.
It said sentiment may improve further in the near term thanks to a feel-good factor as Malaysia has reached about 95% of adult population Covid-19 vaccination coverage and about 75% for the total population, therefore leading to full economic opening henceforth.
It observed that sentiment will also be driven by pro-consumption initiatives in the fiscal Budget 2022 which among others will create about one million jobs and sustain cash aid to vulnerable groups such as the bottom 40% (B40) income group, the disabled as well as unemployed.
This was apart from an impressive development expenditure (DE) that will see a year-on-year growth of 21.9% to RM75.6 billion, it said.
“Overall sentiment will also be pushed by bright growth prospects following a sharp economic turnaround expected in 2022 that will drive output to finally exceed pre-crisis levels,” PIVB said.
On the Business Condition Index (BCI), PIVB noted it also jumped although less bullish than the CSI.
The index increased by 9.5 points in Q3 2021 to reach just slightly below the neutral level of 97.0, its first rebound since Q4 2020.
Sentiment could have been better if not for the Covid-19 restrictions which culminated in several phases of the National Recovery Plan (NRP) which started in June 2021 involving almost three months of partial economic closure,” it said.
It said this is expected to improve thanks to full economic opening since October, phase 3 and 4 of NRP, and underpinned by the acceleration in capital expansion and hiring which have slowed down since the spread of Covid-19.
The massive fiscal effort to boost the economy through an expansionary fiscal budget will also boost sentiment and, therefore, the BCI in the near term, it said.
“This will also be pushed by full economic opening in major economies such as North America, eurozone and China as well as gradual improvement in the global supply chains and Covid-19 pandemic that is slated to move into the endemic stage in 2022,” it said.
Moving forward, PIVB said the worst is almost over now that Malaysia has achieved broad Covid-19 vaccination as over 70% of Malaysians have been fully vaccinated.
Sentiment will also be boosted by targeted lockdown from now on if necessary, suggesting minimal interruption to economic activity, and the government’s efforts to boost output in 2022 that will lift growth to a 10-year high, it added. – Bernama, November 8, 2021
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