KUALA LUMPUR: MIDF Research predicts Malaysia’s retail trade to grow 5.5% year-on-year in 2022.
He said the easing of containment measures, the economic reopening and gradual improvement in macroeconomic data pave the way for strong consumer spending in the fourth quarter of 2021 (Q4’21) as well as 2022.
Earlier yesterday, Malaysia’s Department of Statistics (DoSM) said wholesale and retail sales in November 2021 registered the highest level on record, increasing 7.0% year-on-year to 118 , RM 1 billion, driven by motor vehicles, wholesale and retail.
“We forecast private consumption growth of 6.0% in 2022. With interstate travel permitted, we expect the service sector to benefit and grow by 7.1% for 2022,” he said yesterday in a research note.
However, he said downside risks to the recovery in consumer spending remained under the radar, such as the new variant of Covid-19, the impacts of climate change, the weak recovery in the labor market and the skyrocketing inflationary pressures.
Meanwhile, MIDF Research said consumer spending is expected to remain on an upward trajectory in December 2021 and 2022, supported by a progressive vaccination rate, stable inflationary pressure and an improving labor market.
He said the recovery momentum was in line with the reopening of national economic activities and interstate travel amid higher vaccination rates.
“Looking ahead, we expect private consumption and the service sector to contribute positively to gross domestic product growth in the fourth quarter of 2021,” he said.
In addition, sales of motor vehicles have good prospects in the first half of 2022 due to the extension of the sales tax exemption until June 2022.
As more national economic activities are allowed to operate, MIDF Research has observed that spending on automotive fuel, food and drink, and stalls and markets, among others, has improved markedly.
In addition to the retail trade, sales of motor vehicles have remained on an expansionary trajectory in a context of exemption from sales tax and an improvement in the labor market.
In another development, he said the unemployment rate remained at a pandemic low of 4.3% as the number of unemployed fell below 700,000 in November 2021.
“Sustained employment growth and stable inflationary pressure are expected to benefit and support Malaysia’s consumer spending in the fourth quarter of 21 and into 2022,” he said.
Going forward, MIDF Research remains cautious that consumer spending will be constrained by the upward trend in Omicron-dominant Covid-19 infections in many economies, in addition to high headline inflation in the world. consumer price index and current global supply bottlenecks. – Bernama