Demography and Psychology Alike are Destiny for Private Education

Kuala Lumpur--Little evidence is in sight around K-L of any sort of recession or economic malaise. The malls are many and crowded, construction cranes dot the skyline, and the Malaysian Institute for Economic Research forecasts relative strength for the resource-rich country as compared with more advanced economies. This is not to say that there is no sign of weakness; like its Western counterparts, Malaysia is running significant deficits, but the level of growth in the general economy seems more than sufficient to carry the debt (at least for now).

What the K-L picture illustrates so well is that for private education, demography AND the economy are destiny. To have a viable school, one needs an ample supply of raw material in the form of students from families capable of affording tuition. As the number of expatriate families has declined worldwide (though not so much in SE Asia), enrollment suffers unless the school can compensate by admitting host country children, something that is allowed in some places and not others.

Our research suggests that even when the economy is otherwise strong, like it is here, what matters most is how confident consumers feel about their financial futures. Here, as almost everywhere, the global glut of bad economic news keeps many from feeling confident. In the U.S., some independent schools have lost customers since 2008 due to inability to pay, but many more cases can be found of families leaving simply because they feel less affluent, regardless of objective circumstances.

Trend analysis, when it comes to forecasting private school demand, maybe it is as much about demography and psychology as demography and economics.

- Posted using BlogPress from my iPad.