GST makes consumers cut spending

GST makes consumers cut spending

After the implementation of GST on 1 April 2015, private consumption growth moderated from an average of 7.4% (1Q 2011 – 1Q 2015 avg) to 5.5% (2Q 2015 – 3Q 2016 avg).

Claim:
After the implementation of GST, consumers have started to cut their spending.
Source: Nanyang Siang Pau, 15/3/18

Fact:
After the implementation of GST on 1 April 2015, private consumption growth moderated from an average of 7.4% (1Q 2011 – 1Q 2015 avg) to 5.5% (2Q 2015 – 3Q 2016 avg). It is important to note that private consumption did not contract but continued to expand, albeit at a more moderate rate of growth. This moderation stemmed mainly from slower household spending of discretionary items. After a short period of adjustment, household spending growth gradually increased, as shown by faster expansion of private consumption in the following quarters of 6.8% (4Q 2016 – 4Q 2017 avg), driven by higher income and employment growth. In fact, in 2017, private consumption grew by 7.0%, above the long term average of 6.9% (5-year average; 1Q 2011 – 4Q 2016 avg).

Source: Quarterly Bulletin Bank Negara Malaysia & Department of Statistics Malaysia

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