How did private consumption fare in the final quarter of 2023?

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Private Consumption Contracted Significantly in Q4 2023

Private consumption experienced a notable contraction in the final quarter of 2023, declining by 3.0 per cent in seasonally adjusted terms. This downturn follows a previous decrease in the third quarter, indicating a technical recession in consumer spending driven by stagnant income levels. The annualised rate of this contraction was a substantial 12 per cent.
Decline in Consumer Spending

The 3.0 per cent decrease in private consumption during the fourth quarter of 2023 marks a significant downturn. This contraction is particularly concerning as it follows a 0.7 per cent decline in the preceding third quarter. The overall trend suggests a weakening consumer sentiment and reduced spending capacity.
Impact of Low Incomes

A primary factor contributing to the contraction in private consumption is the pressure of low incomes on household spending. This situation has led to a technical recession in consumer activity, where individuals and families are constrained in their ability to spend on goods and services. The squeeze on disposable incomes for both low and middle-income groups is a key driver of this trend.
Ineffectiveness of E-Wallet Scheme

Initiatives such as the RM100 e-wallet scheme have not demonstrably bolstered private consumption. Despite efforts to stimulate spending through digital wallets, the underlying economic pressures, particularly low incomes, have prevented these measures from significantly impacting overall consumer expenditure. Consequently, private consumption is not expected to be a strong driver of economic growth in the subsequent period.

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How did private consumption fare in the final quarter of 2023?

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