Malaysia’s distributive trade sales growth continued on a double-digit expansion rate for 6 consecutive months, +13.9%yoy in Nov-22. By component, retail spending expanded strongly by +22.9%yoy, wholesale trade was up by +5.6%yoy and motor vehicle sales by +17.2%yoy. The moderating growth rates are highly expected due to receding low-base effects. In addition, GE15 spending could be attributed to the continuous robust expenditure. On a month-on-month basis, only retail sales registered positive growth of +0.7%.
Looking ahead, MIDF opines the upbeat momentum of domestic demand to continue in 2023 amid a steady labour market, softening inflationary pressure, and supportive economic policies.
Despite inflationary pressure, Malaysia’s retail sales remained resilient persistently recording positive month-on-month growth since Mar-22. The sequential monthly growth trends for overall distributive trade, wholesale, and motor vehicles are mixed for the past 11 months. Apart from stable inflation and a steady job market, we foresee the revival of tourism activity is set to support Malaysia’s retail trade spending in 2023. In particular, the reopening of China and Japan would benefit tourism in the ASEAN region including Malaysia. With the upcoming retabling of Budget 2023, we believe cash handouts, bonuses, and local spending incentives to be announced which will benefit overall consumers.
Malaysia’s consumer spending is expanding strongly as reflected in retail trade sales growth of +24%yoy in 11MCY22. Looking at the macro outlook and improving fundamentals, MIDF forecasts retail trade growth at +23.5% for 2022 and +10% for 2023. MIDF believes the pent-up demand will continue into this year underpinned by an improving labour market, stable inflationary pressure, accommodative economic policies, and the uptick in the tourism industry. Even though OPR is on an upward trajectory, we believe it would have minimal effect on the domestic spending outlook
