“Retail sales will increase by 10.5% in 2022”


Analysts believe that domestic spending will remain on an upward trend, supported by strong and supportive economic fundamentals. — Photo Bernama

KUCHING: Retail sales are expected to rise 10.5% for 2022, driven by a surge in consumer spending.

According to MIDF’s research arm Amanah Investment Bank Bhd (MIDF Research), pent-up demand along with favorable fiscal incentives and macroeconomic conditions are driving retail performance in 2022.

“Looking month-over-month (mom) percent, overall retail jumped +5.1% with all sub-components posting a positive rate of expansion,” MIDF Research said.

“Most notably, automobile fuel expenditure increased by 10.1% during the holiday season and school vacations.”

Going forward, the research arm predicted that domestic spending will remain on an upward path, supported by strong and supportive economic fundamentals.

“We expect retail sales to grow 10.5% for 2022. Malaysia’s consumer spending is growing strongly, as evidenced by retail sales growth of 15.8% YoY (yoy ) in the first five months of the current year 2022 (5MCY22).

“Supported by the improving labor market, stable inflationary pressure and fiscal stimuli, private consumption is expected to grow by 7.2% for 2022, a rebound from 1.9% in 2021 and -4.2% in 2020.

MIDF Research estimates that pent-up demand will continue through the end of this year provided there is no significant change in overall inflationary pressure.

“With the reopening of international borders, tourism activity will improve modestly but still below pre-pandemic levels.”

Meanwhile, he noted that some countries continued to record positive and firm retail sales growth despite inflationary risk pressure and monetary policy tightening.

For example, the United States recorded retail sales growth of 8.1% YoY (a three-month high) while retail spending in the Eurozone slowed to 0.2% YoY in May 2022.

“The ASEAN economies of Singapore and Vietnam continued to record double-digit retail sales growth, particularly driven by spending on food and fuel.

“Besides the inflation factor, the falling unemployment rate that led to the revival of domestic demand in the post-pandemic era has fueled consumer spending in many countries,” he said.

As for China, retail sales contracted at a slower pace of 6.7% year-on-year as restrictive measures gradually eased during the month.

“We expect retail spending in China to remain in contraction in June 22 and improve slightly in 2H22,” he noted.


Comments are closed.