The high rates of inflation have contributed to rises in the rankings for several locations in Malaysia, including Johor Baru, says ECA
KUALA Lumpur is now the 32nd most expensive location for expatriates in Asia and has fallen five places globally to 167th position in ECA International’s cost of living rankings.
In a statement today, ECA International regional director — Asia Lee Quane said the high rates of inflation have contributed to rises in the rankings for several locations in Malaysia, including Johor Baru.
“While many food prices have risen significantly, the biggest change is in petrol prices which rose more than 50%. Nevertheless, the ringgit’s weakness against the US dollar offset the impact of inflation in Kuala Lumpur and caused it to fall in the rankings,” she added.
Cities across Thailand and the Philippines have also seen drops in this year’s rankings. Bangkok fell 12 places to 63rd, continuing its move away from the global top 50, while Manila fell 10 places to 67th and Cebu City 14 places to 169th globally. Laos in particular saw the largest fall in rankings among South-East Asian locations, with Vientiane dropping 29 places to 193rd in the world as a result of the kip weakening against the US dollar by 38%.
Meanwhile, surging accommodation costs across the border has widen the gap in living costs between Singapore and its South-East Asian neighbours. The city state rose four places from last year to become the 8th most expensive location in the world for expatriates.
“The biggest driver behind Singapore’s rise in our latest rankings has been the double-digit increase in rental costs in 2022,” said Lee. “The Covid-19 pandemic impacted the supply of accommodation coming to market, and the resurgent demand has increased significantly with the city reopening its borders once again. This may be a short-term shock, but it has nevertheless been responsible for Singapore’s current position as one of the ten most expensive cities worldwide.”
Despite the general uptrend in inflation rates globally, ECA noted that those across Asia have seen relatively smaller upticks, resulting in almost 65% of surveyed locations in the region falling in this year’s cost of living rankings.
Hong Kong, which came in first in last year’s rankings, has moved down one place to become the second most expensive location in the world. In spite of relatively high rates of inflation and a strong Hong Kong dollar, its drop can be attributed to a fall in accommodation costs.
ECA said demand for properties popular with expatriates fell as the Hong Kong economy stuttered in the face of slowing economic growth in China, uncertainties in imposing the national security law as well as strict Covid restrictions.
“Like many places in the world, prices of day-to-day goods and services grew in Hong Kong at a rate well above what we have seen in recent years, while also surpassing the average rate of growth witnessed in the Asia region,” said Lee.
“However, demand for rental accommodation has weakened on account of Hong Kong’s sub-par economic performance recently, which has caused rental prices to fall in turn and contributed to Hong Kong’s decline in our rankings,” she said.
In China, with the yuan weakening against the US dollar and amid relatively low inflation rates, Chinese cities found themselves further down the rankings compared to last year, with Guangzhou and Shanghai dropping out of the global top 10.
“Low rates of inflation compared to other locations worldwide and a weaker currency have made locations in mainland China relatively cheaper for expatriates this year,” explained Lee.
“Although living costs in Chinese cities have risen over the past year, the cities have nonetheless fallen in our rankings as cost of living continues to climb at a faster rate elsewhere,” she added.
Meanwhile, Japan, which has typically been regarded as a country with a relatively high cost of living, saw a significant departure from the norm this year. The depreciation of the Japanese yen by 20% year-on-year against the US dollar led to big falls in the rankings for all Japanese cities surveyed — Tokyo, which ranked third globally last year, has fallen out of the top 10 this year, while Nagoya fell 49 places to 87th. – TMR