KUALA LUMPUR: Private consumption will continue to play a significant role in contributing to economic growth with the sources of growth shifting towards domestic demand.
In the Economic Development 2010 annual report released here yesterday, Bank Negara Malaysia said the pre-requisites to support sustainable growth in private consumption were already in place, namely rising income and wealth, favourable demographics, greater financial and technological development.
Bank Negara said two clear shifts in consumer spending pattern had emerged since 2000 where in the first case, the share of expenditure on discretionary items, personal care, financial, insurance and other services had increased relative to spending in basic necessities.
“The share of these four components of income-sensitive spending rose from 26.5 per cent of total household expenditure in 2000 to 34.7 per cent in 2009,” the central bank said.
The second clear shift is that the consumption of services has outpaced expenditure on goods, where between 2000 and 2009, household consumption services grew by about 10 per cent annually, compared to the 8.4 per cent growth in the consumption of goods.
Bank Negara said these trends were consistent with consumer spending trend observed in other countries, which indicate that as income rises, the share of expenditure on basic necessities tend to decline while that on services tend to increase. — Bernama