In a statement, BMI said household spending growth is expected to improve compared to 2023, buoyed by sustained economic expansion and normalising consumption levels.
"We hold a cautious but positive outlook for consumer spending in Malaysia over 2024, as the economic recovery feeds through to strong real consumer spending growth over the full year.
"While consumer confidence remains sluggish, strong showings in recent retail sales data indicate an improving consumer outlook in Malaysia," it said.
BMI highlighted that spending will face constraints from high debt levels and associated servicing costs.
"However, easing inflation and a tight labour market will support spending, as real wage growth returns to positive territory, supporting purchasing power over the year," it said.
The firm has forecasted year-on-year growth in consumer spending in Malaysia for 2024, aligning with its country risk team's projection of a 4.4 per cent real economic growth rate for the year.
Meanwhile, it cautioned that high household debt levels in a rising interest rate environment pose a significant risk to the 2024 outlook.
"This will require consumers to allocate more of their budgets to debt repayments, which will constrain their ability to spend on other goods and services," it added.
-- BERNAMA
