KUALA LUMPUR, April 11 — MIDF Research is optimistic that 2023’s retail trade growth will be able to touch +8.9 per cent, considering the macroeconomic outlook and improving domestic fundamentals.
In a research note today, MIDF Research said the pent-up demand will continue into this year underpinned by an improving labour market, stable inflationary pressure, accommodative economic policies and an uptick in the tourism industry.
“Even though the overnight policy rate (OPR) is closer to its normalised rate of 3.00 per cent, we believe it would have a minimal effect on domestic spending,” it said.
According to the Department of Statistics Malaysia, Malaysia’s distributive trade sales grew by 14.7 per cent year-on-year (yoy) on Feb 23, marking 11 straight months of double-digit growth rate and the fastest pace in four months.
Nonetheless, despite the double-digit pace, MIDF Research said retail trade is moderating as the low-base factor tapers off. Consumer spending was given a major boost by the Employees’ Provident Fund withdrawals and vehicle sales tax exemption, the research firm said.
“Elevated cost of living pressure and higher interest rates are among the key downside risks to consumer growth.
“However, we opine further recovery in the labour market, a softening of the inflation rate, a pick-up in tourism activities led by China and supportive economic policies to boost household consumption and retail trade spending,” it added.