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KUALA LUMPUR – MIDF Research has forecast Malaysia’s retail trade to expand by 5.5% year-on-year (y-o-y) in 2022.
It said the relaxation of containment measures, the economic reopening and the progressive improvements in macroeconomic data set the stage for strong consumer spending in the fourth quarter of 2021 (Q4 2021) as well as for 2022.
Earlier today, the Statistics Department said wholesale and retail trade sales in November 2021 reached the highest level seen on record, increasing by 7.0% y-o-y to RM118.1 billion led by motor vehicles, wholesale and retail.
“We forecast private consumption to expand by 6.0% in 2022. With interstate travel allowed, we project the services sector to benefit and increase by 7.1% for 2022,” it said in a research note today.
However, it said the downside risks toward revival of consumer spending remained under the radar such as the new Covid-19 variant, the climate change impact, the weakness in labour market recovery, and the spike in inflationary pressure.
Meanwhile, MIDF Research said consumer spending is set to stay on an upward trajectory in December 2021 and 2022, underpinned by the progressive vaccination rate, stable inflationary pressure and improving labour market.
It said the recovery momentum was in line with the reopening of domestic economic activities and interstate travel amid the higher vaccination rate.
“Looking ahead, we expect private consumption and the services sector to contribute positively towards the gross domestic product growth in Q4 2021,” it said.
Furthermore, motor vehicles sales have bright prospects in the first half of 2022 due to the extension of the sales tax exemption until June 2022.
As more domestic economic activities are allowed to operate, MIDF Research observed that spending on automotive fuel, food and beverages, stalls and markets, among others, have improved markedly.
Besides retail trade, the sales of motor vehicles remained in an expansionary path amid the sales tax exemption and improving labour market.
Meanwhile, it said the unemployment rate stayed at a pandemic low of 4.3% as the number of unemployed persons fell below 700,000 in November 2021.
“Steady employment growth and stable inflationary pressure are set to benefit and support Malaysia’s consumer spending in Q4 2021 as well as for 2022,” it said.
Moving forward, MIDF Research remained cautious that consumer spending activities will be constrained by the upward trend in the Omicron-dominant Covid-19 infections in many economies, in addition to the elevated headline Consumer Price Index inflation and the ongoing global supply bottlenecks. – Bernama, January 11, 2022