Are people still buying cars, properties and even smartphones? Of course they are, but signs are there showing ever slowing trends. An article in The Star showed the chart for loans growth for both the household and business from August 2012 to August 2015. Still remember the alarm about the extremely high household debt to GDP? Read here: Household Debt Malaysia? Better Actually, when we refer to the line in the chart, from August 2014 till to date, the loans growth for the household is still increasing but the pace is getting much slower. From the double digits of over 12 percent just over a year ago, this has gone down to the latest number of just 8.3 percent in August 2015. This can be easily explained by the many recent reports about retail growth, car sales and even property transactions.
Easy example, not many are looking at replacing their current LCD TV with a bigger LED Smart TV which will incur debts. In fact, the retail growth is very subdued. Read here: Retail sales still growing but forecast is lowered, again Last year, the prediction of the car sales numbers were still based on expectations that by H2 2015, things should be back to normal. Well, overall car sales numbers are also dropping too. Read here: Lower car sales growth, not a good sign I do not think we need to ask any property agents today. I think many have stopped doing it full time and may need to find something else to do. Requests to view versus decisions to buy are having a huge gap currently. Property Transactions are down. Read here: Residential property transactions see a slight drop nationwide in first quarter of 2015
Enough about household loans. According to analysts in the article in The Star, business loans have also started slowing down too even though it has remained strong all these times that household loans growth were slowing down. The reason is because companies are starting to scale back their expansion plans and even banks are more cautious in lending today. In fact, as at August 2015, business loans are still growing when compared to July and June. The analysts who spoke to Starbiz said that the growth of above 11 percent cannot continue as the economy is slowing down. Malaysia’s gross domestic product (GDP) for 2015 is expected to slow to 4.7 percent for 2015 from 6 percent in 2014 by World Bank. Nomura Bank of Japan meanwhile gave a slightly higher number, 5 percent GDP growth for Malaysia for 2015.
Do note that loans are still growing, whether household or business. However, if the current negative sentiment persists despite the current numbers still in the positive territory, it would just be time when the numbers follow the sentiment. Hang in there and as for Malaysians, time to show our resilience. Exports did grow continuously for 4 months thus far while imports continue to rationalise and this gave us the largest trade surplus in August which was a pleasant surprise and one contributing reason to Ringgit’s good run for past one week. Happy reading.
written on 12 Oct 2015
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