Malaysia’s retail trade to grow 17.6 pct in 2022

KUALA LUMPUR: Malaysia’s retail trade is expected to grow by 17.6 per cent this year, supported by improving macro outlook and fundamentals, said MIDF Amanah Investment Bank Bhd Research (MIDF Research).

In a note yesterday, it said Malaysia’s consumer spending is expanding strongly, as reflected in the retail trade sales growth of 21.6 per cent year-on-year (y-o-y) in the first seven months of 2022.

“We believe the pent-up demand will continue until the end of this year, underpinned by improving labour market, stable inflationary pressure and the reopening of the domestic economy,” it said.

Citing data released by the Department of Statistics Malaysia (DoSM) earlier yesterday, MIDF Research said Malaysia’s retail spending for July 2022 remained on an upward trajectory, with the distributive trade sales rising 41.0 per cent y-o-y in July 2022.

It said retail spending expanded strongly by 37.5 per cent y-o-y, while wholesale trade rose by 20.6 per cent yo-y and motor vehicle sales soared by 613.8 per cent y-o-y.

“The high growth rates were widely expected due to lowbase effects, as Malaysia had faced another tight nationwide lockdown in July 2021,” it said.

Meanwhile, the research house noted that even though the central bank has raised the overnight policy rate (OPR) by 25 basis points to 2.5 per cent last week, it believed the higher benchmark interest rate would have minimal effect on domestic spending.

“The OPR is set to reach 2.75 per cent by end of this year; still below 2019’s level of 3.00 per cent. We believe Malaysia’s monetary policy is on the normalisation path rather than the tightening path, and could possibly reach 3.00 per cent by early 2023,” it said.