Malaysia curbs to hit full-year consumer spending: report

MALAYSIA'S curbs amid the Covid-19 outbreak may mean slower full-year household spending growth of 4.2 per cent, down from a previous projection of 6.3 per cent, said Fitch Solutions Country Risk and Industry Research in a Mar 27 report. This is also down from the estimated 5.6 per cent growth in 2019.

The four-week Movement Control Order from March 18 to April 14 entails the closure of Malaysia's borders, its schools, and all non-essential businesses.

Supermarkets and convenience stores are among the few businesses that are still allowed to operate. Sales are expected to increase due to both consumers stockpiling and a substitution of home-cooked food for restaurant dining, as the latter is not possible under the lockdown.

Restaurants are set to lose at least that month's revenue, with consumer activity possibly having decreased even before the curbs as consumers sought to decrease their likelihood of infection.

"However, there may be some respite for restaurants, as food delivery has been classified as an essential service, and many restaurants are now finding ways to deliver food to consumers," noted the report.

Hotels will also be hard hit, with the Malaysian Association of Hotels projecting a revenue loss of 560.7 million ringgit and occupancy rates of just 11 per cent for the duration of the lockdown. The Malaysia Retailers Association similarly estimates a revenue loss of up to 90 per cent for the sector.

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"Unlike restaurants, which have the ability to transition to food delivery relatively easily, we expect that it will be much harder for retailers to transition into e-commerce because both consumers and delivery providers like Grab and Shopee will be prioritizing food and grocery deliveries," said the report.