Average Malaysian in ‘worst-ever financial position’
Average Malaysian in worst-ever financial position.
The global recession and spiralling inflation means the average Malaysian is in their “worst-ever financial position”, according to the latest RinggitPlus Malaysian Financial Literacy Survey (RMFLS) 2022.
RinggitPlus director Hann Liew described the findings as a “wake-up call to all parties” to take action, as the economic effects of the pandemic have been devastating. Malaysians have real financial challenges to address, including depleted savings and cashflow issues.
He said: “It is a harsh reality not only for the people but also for policymakers and industry players. This is a generational issue that requires long-term solutions with sustained and concerted support from all parties. We cannot leave anyone behind.”
The RinggitPlus survey also found Malaysians from all sectors of society were facing severe financial challenges, now without the financial aid packages that had cushioned them from the impact of the pandemic in 2020 and 2021.
“A total of 70% of respondents indicated that they save less than RM500 ($115) per month or do not manage to save at all. This is the worst ever result tracked by RMFLS in five years,” it said.
The number of Malaysians who save more than RM1,500 per month has also dropped significantly, the survey found. “From 20% in 2020, the figure has dropped four times lower to just 5% in 2022.”
The RMFLS 2022 survey also found that more Malaysians are struggling when it comes to savings, with 53% of respondents stating that they can survive for three months or less with only their savings (52% last year).
“A similar pattern is also seen where 55% of Malaysians spent exactly or more than what they earned each month (44% last year), essentially living pay cheque to pay cheque,” RinggitPlus said.
With depleted savings and the higher cost of living, the survey also highlighted a worrying trend among credit card holders. The survey said: “More credit cardholders are not paying off their bills in full with just 55% (doing so) in 2022 compared to 70% last year.”
It added: “A staggering 66% of respondents above 21 years old stated that they will consider applying for more Employees Provident Fund withdrawals if the government allows it.”
The nationwide survey was conducted via an online questionnaire through a third-party analytics platform, based on a sampling of 3,144 Malaysians aged 18 and above.
GDP affected by global slowdown
The slowdown in the global economy is set to impact on Malaysia’s GDP next year, according to a leading financial services provider.
Malaysian Industrial Development Finance (MIDF) is predicting Malaysian GDP growth will be 4.2% for 2023, due mainly to a slowing down in global demand.
In its 2023 outlook report, MIDF said the global economy is likely to experience a slowdown rather than a recession next year. This will be due to higher interest rates and increasing inflationary pressures, along with a fall in demand from the US and the EU.
Malaysia’s export growth is projected at 2.8%, mainly from a bounce back in tourism activity. It said that if China’s economy recovers sooner than predicted, will provide an extra boost to Malaysia’s services exports as well as tourism activity.
MIDF said it was also “optimistic that the domestic economy will be fuelled by continuous upbeat consumer spending, further improvement in tourism-related activities, and revival of infrastructure projects.
“Going into next year, we believe food inflation as well as overall price growth to trend lower following moderation in global commodity prices and a further easing in tight supply chain pressure, with headline Consumer Price Index (CPI) forecast at 2.3%.
“Consumer spending in Malaysia is to stay steady underpin by a stable inflation rate and the jobless rate is set to decline further to 3.5% next year, among others thanks to strong economic recovery in post-pandemic and returning of non-citizen workers.”
