KUALA LUMPUR: BMI, a Fitch solutions company, has maintained its broadly positive outlook for consumer spending in Malaysia over 2025, with the country’s healthy macroeconomic outlook driving real-term growth in household incomes.
With inflation averaging lower than expected in May, BMI lowered its forecast for headline inflation to average at 1.9 per cent year-on-year (y-o-y) in 2025, down from 2.1 per cent previously, and only slightly up from an average 1.8 per cent in 2024.
It added that this remained low enough to support household purchasing power.
“Overall, we forecast household spending to grow by 3.8 per cent y-o-y over 2025 in real terms to RM930.7 billion, up from MYR896.9 billion in 2024.
“As a result, household spending has returned close to pre-COVID levels of growth, where it grew at a real average rate of 5.2 per cent y-o-y during the 2015-2019 period.
“However, spending will continue to be restrained by Malaysian consumers’ high levels of indebtedness and the correspondingly high debt servicing costs,“ it said in its ‘Malaysia Consumer Outlook: Strong Growth Forecast Over 2025 and 2026’ commentary today.
Looking ahead to 2026, BMI expect consumer spending to accelerate, underpinned by strong gross domestic product (GDP) growth and a stable employment outlook.
Consumer confidence and willingness to spend would be further supported by a stable inflationary environment and Bank Negara Malaysia (BNM) back in loosening mode, cutting its benchmark interest rate by a further 25 basis points from a forecast 2.75 per cent in December 2025 to 2.50 per cent by end-2026.
“Therefore, we forecast total household spending growth to be at 5.0 per cent y-o-y in real terms for 2025, taking spending to RM977.3 billion,“ it said.
BMI added that solid household incomes and tourism-related retail sales would further support a steady uptick in spending over the 2025-2029 forecast period. - Bernama
