The State Of The Economy Malaysia
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The State of the Economy Malaysian consumers attitudes towards the economy and prices
October 2008
© 2008. Synovate Ltd. All rights reserved. The concepts and ideas submitted to you herein are the intellectual property of Synovate Ltd. They are strictly of confidential nature and are submitted to you under the understanding that they are to be considered by you in the strictest of confidence and that no use shall be made of the said concepts and ideas, including communication to any third party without Synovate’s express prior consent and/or payment of related professional services fees in full.
Why is this all so important? - A timeline • August 9th 2007 – Bad news from BNP Paribas triggered a sharp rise in the cost of credit • September 2007 – Northern Rock customers withdraw 1 billion pounds sterling in a day (approx. RM6 billion) • March 2008 – BN loses a number of states in parliamentary elections leading to degree of political and economic uncertainty • June 2008 – Malaysian pump prices rise to RM2.70 on the back of high global oil prices • July 2008 – US Mortgage lender IndyMac collapses • August 2008 – Synovate survey AND SINCE THEN A BARRAGE OF ALMOST DAILY ECONOMIC NEWS ALERTS !!
© Synovate 2008
1
Nearly 6500 interviews across 9 countries in August 2008
© Synovate 2008
2
The Global Economy
How bad is it ? If you live in a ‘developed’ economy, then things are not considered to be getting better anytime soon! Q1: Which of the following statements was most applicable to your view on the current state of the economy in your country?
Malaysia Japan
The economy is going downhill and will get worse before it gets better
Taiwan
Brazil
63
USA
France
63
64
Russia
Turkey
South Africa
49 37 22
39
20 8
[Unit: %] © Synovate 2008
4
Far higher level of optimism in ‘developing’ countries or is it blind optimism? Q1: Which of the following statements was most applicable to your view on the current state of the economy in your country?
Malaysia Japan
The economy is in a bad patch but will quickly get better
Taiwan
Brazil
USA
France
Russia
Turkey
South Africa
55 45
45
42 32
30 22
20
12
[Unit: %] © Synovate 2008
5
Actually it may be naivety – those that have been through economic crises before may have learnt Q1: Which of the following statements was most applicable to your view on the current state of the economy in your country?
15-24
25-34
35-49
50-64
The economy is………..
58
RM999 & below
52
46 36
37
28
24
RM1k1999
47
RM2k3999
RM4k & above
50 40
….in a bad patch but will quickly get better
…going downhill and will get worse before it gets better
17
17
14
21
23
24
[Unit: %] © Synovate 2008
6
A large decline in saving and investing as disposable income becomes reduced with rising inflation costs Q2: Have you changed any of the following monetary habits in the last six months?
Malaysia Japan
Taiwan
USA
France
Russia
Turkey
South Africa
15
Nett Change in People Saving
-9
-11 -28
Nett Change in People Investing
Brazil
-18
-2 -14
-17
-29
-12 -27
-38
-11
-21
-15 -35
-37 -53
[Unit: %] © Synovate 2008
7
Half of Malaysians (49% net) are now more likely to check the prices of food items that they buy
© 2008. Synovate Ltd.
8
Malaysians appear to be very prudent in comparison to counterparts when it comes to spending on luxuries Q2: Have you changed any of the following monetary habits in the last six months?
Malaysia Spending less on luxuries
Less impulse buying
Compare prices first more
© 2008. Synovate Ltd.
Japan 81
52
59
Taiwan 59
61
56
58
55
57
9
Whilst the more affluent are least likely to be cutting their spending, they are more likely to still be checking cost of products to ensure value
Spending less on Luxuries 100
91
88
Compare Prices More 86 79
50
56
58
MHI
MHI RM1k1,999
65
66
RM2k-3,999
>RM4k
0
© 2008. Synovate Ltd.
10
But the reality is that spending cuts are evident wherever you go… Q3a: Have you had to make cuts in your spending in the past 6 months?
Malaysia Japan
Taiwan
USA
75
69 58
Brazil
62
France
Russia
Turkey
South Africa
80 70
64
61 40
[Unit: %] © 2008. Synovate Ltd.
11
The travel industry in Malaysia is likely to be the hardest hit - indeed this is a global phenomenon Q3b: What was the first item you gave up?
18
Holiday / leisure travel 13
Branded Items
12
Meals with family / partner
11
Big ticket items e.g. TV Foods that are treat
10
Meals with friends
10 6
Fuel for non work trips High-tech gadgets © 2008. Synovate Ltd.
5 12
Generally a climate of worry, although a proportion of Malaysians still remain unconcerned about the state of the economy! Q5: When you think about the current state of the economy, what is your greatest fear? Name one.
Malaysians I am worried about losing my job / household income earner losing job - 25%
Americans Being able to afford mortgage / rent payments - 25%
I am worried about losing my job / Not being able to afford sufficient food for household income earner losing job – 20% my family – 17%
Nothing, I’m not worried – 17%
© 2008. Synovate Ltd.
Losing my investment money – 13%
13
58% of Malaysians have changed a major life decision due to the current economic situation
© 2008. Synovate Ltd.
14
And yet some segments still remarkably more buoyant than others about the future over coming 12 months – young Malaysians Q6: Do you think your personal economic situation will get better or worse in the next 12 months? Q7: How about the economic situation in your country? Do you think it will get better or worse on the next 12 months? Better
15-24, n = 287 0
50
Personal Economic Outlook
48
Country’s Economic Outlook
47
© Synovate 2008
25-34, n = 237 100
30 17
18 28
0
50
41
29 22
30 24 36
Same
Worse
50-64, n = 176
35-49, n = 310 100
0
50
33
32 20
27 17 39
100
0
50
30
39
100
23
36 13 35
15
And the most affluent segment who largely believe their personal situation will improve despite the overall climate Q6: Do you think your personal economic situation will get better or worse in the next 12 months? Q7: How about the economic situation in your country? Do you think it will get better or worse on the next 12 months? Better
RM999 & below, n = 123 0
Personal Economic Outlook
Country’s Economic Outlook
© Synovate 2008
50
36
31 24
39 14 35
100
RM1000 - 1999, n = 176 0
50
34
29 24
37 16 33
100
Same
RM2000 - 3999, n = 262 0
50
37
100
35 21
37 18 33
Worse
RM4000 & above, n = 246 0
50
48
100
28 17
35 19 38
16
And we know that Affluent Malaysians have continued in 2008 to invest particularly with diversification in mind…
• Investment in unit trusts and mutual funds increased from 29% to 40% so far in 2008 • Use of Offshore investment accounts increased from 3% to 8% • Residential and commercial property investment increased from 21% to 29%
Source: PAX Malaysia © 2008. Synovate Ltd.
17
Source: PAX Malaysia © 2008. Synovate Ltd.
And by mid 2008, affluent Malaysians had spent 12% more on luxury goods compared to one year ago - Particularly on jewelry, watches and clothes 18
So the question is will they continue to do so in this even more uncertain global environment..? Timeline • August 9th 2007 – Bad news from BNP Paribas triggered a sharp rise in the cost of credit • September 2007 – Northern Rock customers withdraw 1 billion pounds sterling in a day (approx. RM6 billion) • March 2008 – BN loses a number of states in parliamentary elections leading to degree of political and economic uncertainty • June 2008 – Malaysian pump prices rise to RM2.70 on the back of high global oil prices • July 2008 – US Mortgage lender IndyMac collapses • August 2008 – Synovate survey • Since then in September alone : • Lehman Brothers files for bankruptcy • Bail-out plans announced by Western governments including US, UK and Iceland • Ongoing impact of credit crunch all around the world…..
© 2008. Synovate Ltd.
19
FINALLY – despite everything…. 53% of Malaysians say they are worried but just can’t stop spending all together – the highest out of the 9 countries we surveyed! © 2008. Synovate Ltd.
20
Thank You For Your Attention. Our Curiosity Is All Yours.
© 2008. Synovate Ltd. All rights reserved. The concepts and ideas submitted to you herein are the intellectual property of Synovate Ltd. They are strictly of confidential nature and are submitted to you under the understanding that they are to be considered by you in the strictest of confidence and that no use shall be made of the said concepts and ideas, including communication to any third party without Synovate’s express prior consent and/or payment of related professional services fees in full.
© Synovate 2008
October 2008
© 2008. Synovate Ltd. All rights reserved. The concepts and ideas submitted to you herein are the intellectual property of Synovate Ltd. They are strictly of confidential nature and are submitted to you under the understanding that they are to be considered by you in the strictest of confidence and that no use shall be made of the said concepts and ideas, including communication to any third party without Synovate’s express prior consent and/or payment of related professional services fees in full.
Why is this all so important? - A timeline • August 9th 2007 – Bad news from BNP Paribas triggered a sharp rise in the cost of credit • September 2007 – Northern Rock customers withdraw 1 billion pounds sterling in a day (approx. RM6 billion) • March 2008 – BN loses a number of states in parliamentary elections leading to degree of political and economic uncertainty • June 2008 – Malaysian pump prices rise to RM2.70 on the back of high global oil prices • July 2008 – US Mortgage lender IndyMac collapses • August 2008 – Synovate survey AND SINCE THEN A BARRAGE OF ALMOST DAILY ECONOMIC NEWS ALERTS !!
© Synovate 2008
1
Nearly 6500 interviews across 9 countries in August 2008
© Synovate 2008
2
The Global Economy
How bad is it ? If you live in a ‘developed’ economy, then things are not considered to be getting better anytime soon! Q1: Which of the following statements was most applicable to your view on the current state of the economy in your country?
Malaysia Japan
The economy is going downhill and will get worse before it gets better
Taiwan
Brazil
63
USA
France
63
64
Russia
Turkey
South Africa
49 37 22
39
20 8
[Unit: %] © Synovate 2008
4
Far higher level of optimism in ‘developing’ countries or is it blind optimism? Q1: Which of the following statements was most applicable to your view on the current state of the economy in your country?
Malaysia Japan
The economy is in a bad patch but will quickly get better
Taiwan
Brazil
USA
France
Russia
Turkey
South Africa
55 45
45
42 32
30 22
20
12
[Unit: %] © Synovate 2008
5
Actually it may be naivety – those that have been through economic crises before may have learnt Q1: Which of the following statements was most applicable to your view on the current state of the economy in your country?
15-24
25-34
35-49
50-64
The economy is………..
58
RM999 & below
52
46 36
37
28
24
RM1k1999
47
RM2k3999
RM4k & above
50 40
….in a bad patch but will quickly get better
…going downhill and will get worse before it gets better
17
17
14
21
23
24
[Unit: %] © Synovate 2008
6
A large decline in saving and investing as disposable income becomes reduced with rising inflation costs Q2: Have you changed any of the following monetary habits in the last six months?
Malaysia Japan
Taiwan
USA
France
Russia
Turkey
South Africa
15
Nett Change in People Saving
-9
-11 -28
Nett Change in People Investing
Brazil
-18
-2 -14
-17
-29
-12 -27
-38
-11
-21
-15 -35
-37 -53
[Unit: %] © Synovate 2008
7
Half of Malaysians (49% net) are now more likely to check the prices of food items that they buy
© 2008. Synovate Ltd.
8
Malaysians appear to be very prudent in comparison to counterparts when it comes to spending on luxuries Q2: Have you changed any of the following monetary habits in the last six months?
Malaysia Spending less on luxuries
Less impulse buying
Compare prices first more
© 2008. Synovate Ltd.
Japan 81
52
59
Taiwan 59
61
56
58
55
57
9
Whilst the more affluent are least likely to be cutting their spending, they are more likely to still be checking cost of products to ensure value
Spending less on Luxuries 100
91
88
Compare Prices More 86 79
50
56
58
MHI
MHI RM1k1,999
65
66
RM2k-3,999
>RM4k
0
© 2008. Synovate Ltd.
10
But the reality is that spending cuts are evident wherever you go… Q3a: Have you had to make cuts in your spending in the past 6 months?
Malaysia Japan
Taiwan
USA
75
69 58
Brazil
62
France
Russia
Turkey
South Africa
80 70
64
61 40
[Unit: %] © 2008. Synovate Ltd.
11
The travel industry in Malaysia is likely to be the hardest hit - indeed this is a global phenomenon Q3b: What was the first item you gave up?
18
Holiday / leisure travel 13
Branded Items
12
Meals with family / partner
11
Big ticket items e.g. TV Foods that are treat
10
Meals with friends
10 6
Fuel for non work trips High-tech gadgets © 2008. Synovate Ltd.
5 12
Generally a climate of worry, although a proportion of Malaysians still remain unconcerned about the state of the economy! Q5: When you think about the current state of the economy, what is your greatest fear? Name one.
Malaysians I am worried about losing my job / household income earner losing job - 25%
Americans Being able to afford mortgage / rent payments - 25%
I am worried about losing my job / Not being able to afford sufficient food for household income earner losing job – 20% my family – 17%
Nothing, I’m not worried – 17%
© 2008. Synovate Ltd.
Losing my investment money – 13%
13
58% of Malaysians have changed a major life decision due to the current economic situation
© 2008. Synovate Ltd.
14
And yet some segments still remarkably more buoyant than others about the future over coming 12 months – young Malaysians Q6: Do you think your personal economic situation will get better or worse in the next 12 months? Q7: How about the economic situation in your country? Do you think it will get better or worse on the next 12 months? Better
15-24, n = 287 0
50
Personal Economic Outlook
48
Country’s Economic Outlook
47
© Synovate 2008
25-34, n = 237 100
30 17
18 28
0
50
41
29 22
30 24 36
Same
Worse
50-64, n = 176
35-49, n = 310 100
0
50
33
32 20
27 17 39
100
0
50
30
39
100
23
36 13 35
15
And the most affluent segment who largely believe their personal situation will improve despite the overall climate Q6: Do you think your personal economic situation will get better or worse in the next 12 months? Q7: How about the economic situation in your country? Do you think it will get better or worse on the next 12 months? Better
RM999 & below, n = 123 0
Personal Economic Outlook
Country’s Economic Outlook
© Synovate 2008
50
36
31 24
39 14 35
100
RM1000 - 1999, n = 176 0
50
34
29 24
37 16 33
100
Same
RM2000 - 3999, n = 262 0
50
37
100
35 21
37 18 33
Worse
RM4000 & above, n = 246 0
50
48
100
28 17
35 19 38
16
And we know that Affluent Malaysians have continued in 2008 to invest particularly with diversification in mind…
• Investment in unit trusts and mutual funds increased from 29% to 40% so far in 2008 • Use of Offshore investment accounts increased from 3% to 8% • Residential and commercial property investment increased from 21% to 29%
Source: PAX Malaysia © 2008. Synovate Ltd.
17
Source: PAX Malaysia © 2008. Synovate Ltd.
And by mid 2008, affluent Malaysians had spent 12% more on luxury goods compared to one year ago - Particularly on jewelry, watches and clothes 18
So the question is will they continue to do so in this even more uncertain global environment..? Timeline • August 9th 2007 – Bad news from BNP Paribas triggered a sharp rise in the cost of credit • September 2007 – Northern Rock customers withdraw 1 billion pounds sterling in a day (approx. RM6 billion) • March 2008 – BN loses a number of states in parliamentary elections leading to degree of political and economic uncertainty • June 2008 – Malaysian pump prices rise to RM2.70 on the back of high global oil prices • July 2008 – US Mortgage lender IndyMac collapses • August 2008 – Synovate survey • Since then in September alone : • Lehman Brothers files for bankruptcy • Bail-out plans announced by Western governments including US, UK and Iceland • Ongoing impact of credit crunch all around the world…..
© 2008. Synovate Ltd.
19
FINALLY – despite everything…. 53% of Malaysians say they are worried but just can’t stop spending all together – the highest out of the 9 countries we surveyed! © 2008. Synovate Ltd.
20
Thank You For Your Attention. Our Curiosity Is All Yours.
© 2008. Synovate Ltd. All rights reserved. The concepts and ideas submitted to you herein are the intellectual property of Synovate Ltd. They are strictly of confidential nature and are submitted to you under the understanding that they are to be considered by you in the strictest of confidence and that no use shall be made of the said concepts and ideas, including communication to any third party without Synovate’s express prior consent and/or payment of related professional services fees in full.
© Synovate 2008
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