MIDF Research forecast retail trade growth can reach 8.9pct this year

 Publish date: Wed, 15 Mar 2023, 9:53 AM

KUALA LUMPUR:  Malaysia's retail trade growth forecast will be able to touch 8.9 per cent for 2023 driven by the pent-up demand for the year underpinned by improving labour market, stable inflationary pressure, accommodative economic policies and an uptick in the tourism industry, MIDF Research said.

It said the normalising overnight policy rate, which is closer to the normalised rate of three per cent,  would have minimal effect on the domestic spending outlook.

"Looking ahead, we opine the upbeat momentum of domestic demand to continue in 2023 underpin by steady labour market, softening inflationary pressure, pick-up in tourism activities and supportive economic policies," it said in a research note today.

It said airport passenger movements is also expected to improve in 2023 underpinned by borders reopening by China and Japan.

However, the research house said the recovery towards the 2019 level is still a long journey despite the international borders reopening by Malaysia.

"Our house view is that the earliest for passenger traffic to reach 2019's level only by 2024.

"Meanwhile, we also spotted signs of moderation as compared to the previous year, Malaysia's consumers among others were boosted by the Employees Provident Fund (EPF) withdrawals and vehicle sales tax exemption," it said.

Therefore, it said the retail trade growth is expected to moderate amid high base effects.

"Elevated cost of living pressure and higher interest rate levels are among key downside risks to the consumer growth," it said.

Nevertheless, it said the further recovery of the labour market, softening inflation rate, pick-up in tourism activities led by China's tourists and supportive economic policies would bolster household consumption and retail trade spending for this year.

According to the data released by the Department of Statistics Malaysia today, Malaysia's wholesale and retail trade grew 12.4 per cent year-on-year (y-o-y) in January 2023 to record monthly sales value of RM135.1 billion attributed to the retail trade sub-sector.


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