Average wealth in Malaysia drops by over 5%

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kl-monorailHouseholds in Malaysia lost a total of 116 billion ringgit or more than five per cent of their total wealth this year, according to the new Global Wealth Report released by Credit Suisse Research Institute.

In US dollar terms, the drop means that each of the country’s 19 million adults are now an average of $1,894 poorer than they had been in 2015, with the current share of wealth per adult dropping to $24,429.

Compared to Singapore, this figure is more than ten times lower. Singapore adults have an average wealth of $276,885 in 2016.

At the same time, the average debt of each Malaysian adult rose from $7,054 in 2015 to $7,462 this year.

The report points out that Malaysia, once categorised as “intermediate wealth group” with a mean annual wealth in the $25,000 to $100,000 range, has fallen out of this category and is now in the “frontier wealth” range.

The “frontier wealth” category ranges from $5,000 to $25,000 per adult and covers the largest area of the world and most of the heavily populated countries, including China, Russia, Brazil, Egypt, Indonesia, the Philippines and Turkey.

The reduced wealth translates in less purchasing power and is especially meaningful as Malaysia had consistently been in the top ten countries with the fastest growing wealth between 2000 and 2015, with an aggregated expansion of 4.8 per cent. The drop in wealth thus raises concern because it comes amid the country’s push to break out of the middle-income trap and into developed nation status by 2020.

In US dollar terms, one major contributor to the declining overall wealth is the depreciating ringgit. Last year, Malaysia’s currency lost 18 per cent of its value against the greenback, making it Asia’s worst performing currency in US dollar terms. This year so far, the currency dropped 6.4 per cent against the US dollar to around 4.46 by the end of November.

Analysts expect the ringgit to continue to drop in 2017 and some even estimated the currency will fall to 5 ringgit against the US dollar, putting further pressure on household spending power as pricier imports will accelerate inflation.

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Households in Malaysia lost a total of 116 billion ringgit or more than five per cent of their total wealth this year, according to the new Global Wealth Report released by Credit Suisse Research Institute. In US dollar terms, the drop means that each of the country’s 19 million adults are now an average of $1,894 poorer than they had been in 2015, with the current share of wealth per adult dropping to $24,429. Compared to Singapore, this figure is more than ten times lower. Singapore adults have an average wealth of $276,885 in 2016. At the same time, the...

Reading Time: 2 minutes

kl-monorailHouseholds in Malaysia lost a total of 116 billion ringgit or more than five per cent of their total wealth this year, according to the new Global Wealth Report released by Credit Suisse Research Institute.

In US dollar terms, the drop means that each of the country’s 19 million adults are now an average of $1,894 poorer than they had been in 2015, with the current share of wealth per adult dropping to $24,429.

Compared to Singapore, this figure is more than ten times lower. Singapore adults have an average wealth of $276,885 in 2016.

At the same time, the average debt of each Malaysian adult rose from $7,054 in 2015 to $7,462 this year.

The report points out that Malaysia, once categorised as “intermediate wealth group” with a mean annual wealth in the $25,000 to $100,000 range, has fallen out of this category and is now in the “frontier wealth” range.

The “frontier wealth” category ranges from $5,000 to $25,000 per adult and covers the largest area of the world and most of the heavily populated countries, including China, Russia, Brazil, Egypt, Indonesia, the Philippines and Turkey.

The reduced wealth translates in less purchasing power and is especially meaningful as Malaysia had consistently been in the top ten countries with the fastest growing wealth between 2000 and 2015, with an aggregated expansion of 4.8 per cent. The drop in wealth thus raises concern because it comes amid the country’s push to break out of the middle-income trap and into developed nation status by 2020.

In US dollar terms, one major contributor to the declining overall wealth is the depreciating ringgit. Last year, Malaysia’s currency lost 18 per cent of its value against the greenback, making it Asia’s worst performing currency in US dollar terms. This year so far, the currency dropped 6.4 per cent against the US dollar to around 4.46 by the end of November.

Analysts expect the ringgit to continue to drop in 2017 and some even estimated the currency will fall to 5 ringgit against the US dollar, putting further pressure on household spending power as pricier imports will accelerate inflation.

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