KUALA LUMPUR (August 11): MIDF Research has raised its forecast for retail trade growth to 17.6% for 2022 from 10.5% previously, in anticipation of stronger gross domestic product (GDP) growth in second trimester (2T).
In a note, the research house said Malaysia’s consumer spending was growing strongly, as evidenced by retail sales growth of 19.1% year-on-year (yoy) in the first half of 2022 (1H2022). .
Malaysia’s retail trade sales grew 44% year-on-year in June 2022, the fastest pace in 14 months.
As for 2Q2022, retail trade sales increased 26.3% YoY (1Q2022: 8.6% YoY).
“Most notably, domestic demand continued to remain on an upward trend thanks to the improving labor market, stable inflationary pressure, the continued recovery of the national economy, including the reopening of international borders. and special withdrawals from the Employees Provident Fund in April 2022.
“Looking ahead, the upbeat momentum in domestic demand is expected to continue in the second half of the year, particularly on the back of stable overall price growth and a lower unemployment rate,” he said. .
The MIDF estimates that pent-up demand will continue through the end of this year, supported by an improving labor market, stable inflationary pressure and continued reopening of the domestic economy.
“Even if the Overnight Policy Rate (OPR) is on an upward trajectory, we believe it would have minimal effect on domestic spending. The OPR is expected to reach 2.50-2.75% by end of this year, still below the 2019 level of 3.00%,” he noted.
Malaysia’s monetary policy is on a process of normalizing rather than tightening, possibly reaching 3.00% by the middle of next year, the MIDF said.