A new study by Khazanah Research Institute (KRI) challenges the traditional classification of income groups in Malaysia, revealing that only the wealthiest 30% exhibit middle-class spending habits. The M50, or middle 50%, remain economically vulnerable, struggling to balance essential needs with aspirations.
According to Khazanah Research Institute’s (KRI) latest study, the current classification of the Bottom 40 (B40), Middle 40 (M40), and Top 20 (T20) income groups does not accurately reflect the true economic stratification of Malaysian households.
Instead, the findings revealed that only the Top 30 per cent (T30) income earners exhibit middle-class spending patterns, while the Middle 50 per cent (M50)-the group between the B20 and the T30-remains economically vulnerable, experiencing trade-offs between essential and aspirational expenditures. “The findings raise an important question about the validity of the current household demarcation of B40, M40, and T20 adopted by the government of Malaysia,” KRI said in a statement today regarding its latest working paper titled “Searching for the ‘Poor’ and ‘Middle Class’ in Malaysia,” published on Dec 30, 2024. According to KRI, Malaysia has consistently followed the World Bank’s demarcation of B40/M40/T20 from the Ninth Malaysia Plan to the Eleventh Malaysia Plan for almost 15 years, from 2006 to 2020.“These demarcations may not be entirely accurate since the households within these ranges do not exhibit similar consumption characteristics,” it sai
ECONOMICS INCOME CONSUMPTION MIDDLE CLASS MALAYSIA
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