Malaysia’s distributive trade sales growth continued on a double-digit expansion rate for 5-consecutive months, +23.9%yoy in Sep-22 and +32.7%yoy in the third quarter of 2022, reaching a new peak point. By component, retail spending expanded strongly by +30%yoy, wholesale trade was up by +13.3%yoy and motor vehicle sales by +51%yoy. The high growth rates were widely expected due to low-base effects as Malaysia faced another tight nationwide lockdown from Jul-21 until Sep-21.
On third quarter performances, retail trade growth hit a new high at +34%yoy while wholesale and motor vehicles at +16.6%yoy and +277.4%yoy respectively. Robust domestic spending among others was driven by stable inflationary pressure, improving labour market and accommodative monetary as well as fiscal policies. Looking ahead, it opines that the upbeat momentum of domestic demand to continue in 4QCY22 and 2023 amid a steady labour market, softening inflationary pressure and supportive economic policies.
Consumer spending demand remained firm. 12.2% of distributive trade sales contributed by motor vehicle purchases in Sep-22, 2% points higher than the same month in the previous year. Pre-pandemic levels for the average motor vehicle sales share is 11.5%. In general, Malaysia’s consumer spending remained solid as reflected in the positive month-on-month growth in retail trade sales. MIDF opines the strong economic fundamentals especially the declining jobless rate and the stable inflation rate will continue to support Malaysia’s consumer spending in 2HCY22 and 2023.
Malaysia’s retail trade growth is forecast at 17.6% for 2022. Consumer spending is expanding strongly as reflected in retail trade sales growth of +23.9%yoy in 9MCY22. Looking at the macro outlook and improving fundamentals, MIDF projects retail trade growth to +17.6% for this year. It believes the pent-up demand will continue until end of this year underpinned by an improving labour market, stable inflationary pressure and the domestic economy reopening. Even though OPR is on an upward trajectory, believe it would have minimal effect on domestic spending. Current OPR at 2.75% still below 2019’s level of 3.00%. MIDF believe Malaysia’s monetary policy is on normalisation process rather than a tightening path, possibly to reach 3.00% by early 2023
