KUALA LUMPUR, Jan 19 — There is no data to support claims that cheaper oil price translates to more consumer spending, HSBC Bank Malaysia Bhd said today, noting that Malaysians were grappling with inflation following the implementation of the Goods and Services Tax (GST) last year.

The bank said the weak ringgit has also dented consumer confidence further, forecasting a slowdown in private consumption growth to below 3 per cent throughout 2016.

It also added that Malaysians’ faith in the economy was now worse than during the 2008 financial crisis.

“One of the questions posed was: will the cheaper oil price mean more savings and spending for consumers? Unfortunately we have not seen that come to data.

“And the impact of the GST has also posed headwinds to consumption… ringgit’s weakening has on consumer sentiment. Malaysia’s consumer confidence has dropped to ‘08-09 financial crisis level,” said Lim Su Sian, the bank’s Southeast Asian economist at a media briefing today.

Lim said the sluggish private spending, coupled with a thin export margin, is expected to cut Malaysia’s growth to 3.6 per cent, about 1.2 per cent lower than Putrajaya’s revised forecast.

The federal government recently said consumers stood to benefit from the prolonged crude oil price slump as the savings from cheaper oil meant they had more to spend.

The assertion came amid public anger over the drastic rise in goods prices that followed the government’s introduction of the GST April last year. The weak ringgit has also exacerbated inflation.

Prime Minister Datuk Seri Najib Razak is scheduled to announce some revisions to the 2016 Budget on January 28 after oil price dropped below US$30 (RM131) per barrel this week.

The government had last year announced Budget 2016 at RM267 billion, which was already RM7 billion lower than the sum for 2015.

Despite the planned revision, Najib said he intends to meet his previously stated spending reforms and remains committed to reduce the deficit to 3.1 per cent of GDP.

But HSBC believes some fiscal consolidation measures will likely be delayed, although it stressed on the need for Putrajaya to meet its debt obligation.

Lim said Malaysia also needed to immediately address some of its medium-term problems like high household and corporate debt, which stands at 90 per cent and 100 per cent of GDP respectively.

Economists had previously warned that Malaysia’s staggering household debt problem could one day explode and take a toll on the country’s finances.