Malaysia suffered the worst consumer confidence levels in Southeast Asia in the third quarter, according to a survey by market research firm Nielsen, underperforming regional peers, who remained among the world's top 10 optimists.
Consumer confidence in Malaysia fell to 78 points over the July-September period, down 11 percentage points on the quarter, the report released late Tuesday said. The index score was a record low for Malaysia since Nielsen started the global survey in 2005, and marked the lowest score among the six Southeast Asian economies surveyed. Malaysia is the only Southeast Asian country to underperform the global average of 99.
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In addition, the quarterly decline of 11 percentage points marked the steepest drop in confidence levels in the region.
The Nielsen report attributed waning confidence to brewing worries over Malaysia's economic outlook, a near 20 percent drop in the value of the Malaysian ringgit year-to-date and the spreading of what is being called the country's worst-ever political crisis.
Malaysia's Prime Minister Najib Razak has been facing questions over his alleged role in a graft scandal at state investment fund 1Malaysia Development Bhd (1MDB). In an interview with local daily spreadsheet The Star on Wednesday, Najib said the government is "applying rigorous and exhaustive processes of investigation" to address concerns over governance. He also expressed his confidence in the implementation of "a successful rationalisation process with a massive reduction in debts" in the state investment fund in the remaining months of 2015.
More than 60 percent polled in the third quarter cited concerns about the nation's financial conditions, compared with 43 percent in the previous three months. Meanwhile, a third of the respondents said political stability was the second-most worrying issue, an increase from 13 percent in the last quarter.
"The currency devaluation has potentially impacted the general perception of the country's economic strength of the country. [As] concerns over rising food prices subsided [from the second quarter], political stability is now the second highest concern after recent high-profile demonstrations and as politics [dominates] the media headlines," Richard Hall, country manager of Nielsen Malaysia, told CNBC in an e-mail interview.
The Nielsen survey also found that recessionary sentiment is growing in Malaysia, up a "notable" 16 percentage points in the third quarter, with "nearly nine in 10 Malaysians feeling the country is currently in a state of recession." Indonesia and Thailand are the other two countries in the region which saw a rise in recessionary sentiment, up 10 and 8 percentage points respectively.
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Malaysia's second-quarter gross domestic product (GDP) growth slowed to its lowest rate since the third quarter of 2013. The Southeast Asian economy expanded 4.9 percent on-year over the April-June period.
These results mirror a similar survey released by the Malaysian Institute of Economic Research (Mier) on October 28. Mier's third-quarter consumer sentiment index (CSI) hit a new low of 70.2, down from the 71.7 points recorded in the preceding three months, as Malaysians realize that their money isn't going as far as it used to.
As a result, consumers in the Southeast Asian country of 30.4 million are "becoming more frugal in view of the increasing cost of living," Nielsen's Hall said.
Citing the same reasons, the Malaysia Retailers Association (MRA) in July lowered its projected retail growth for the third time this year, to 4 percent from 4.9 percent, as consumers opt to save rather than spend their spare cash.
Caroline Russell, CEO of Malaysia's homegrown tea maker Boh Plantations, told CNBC in an interview with "Managing Asia" last month: "Malaysians are beginning to feel the pinch after what has been a difficult year for Malaysians, especially with the introduction of the goods and services tax (GST) in April." Russell was referring to the implementation of the 6% GST in April this year, with the aim of reducing the country's budget deficit.
Rest of Southeast Asia
Consumers elsewhere in the region are less gloomy.
The Philippines, Indonesia, Thailand and Vietnam remained among the world's top 10 optimists, in third (117), fourth (116), fifth (111) and tenth (105) positions respectively. Meanwhile, Singapore which managed to cross the 100-point line which demarcates gloom from cheer, is the 12th most confident country in the world. Singapore scored 101 on the index in the third quarter.
Despite the relatively upbeat sentiment, there are emerging signs of anxiety over areas such as the economy, job security and health.
"With the exception of Malaysia, Southeast Asian confidence levels are still tracking along the global average but the past few quarters have seen some tapering which is reflective of the softening in the region's economies," Nielsen said.
"Concerns about the economy, political stability and the increasing cost of living are causing apprehension for consumers in some markets, leading them to pull back on spending," the report added.
The Nielsen Global Survey of Consumer Confidence and Spending Intentions was conducted between August 10 and September 4, and polled more than 30,000 online consumers in 60 countries worldwide.