Retail trade expected to grow 5.5% this year: MIDF Research

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KUALA LUMPUR: MIDF Research predicts that retail trade in Malaysia will grow by 5.5% year-on-year (year-on-year) in 2022.

He said the easing of containment measures, economic reopening and gradually improving macroeconomic data paved the way for strong consumer spending in the fourth quarter of 2021 (Q4’21) as well as in 2022.

Earlier yesterday, the Department of Statistics Malaysia (DoSM) said wholesale and retail trade sales in November 2021 registered the highest level on record, rising 7.0% year-on-year to 118 RM.1 billion, driven by motor vehicles, wholesale and retail trade.

“We expect private consumption to grow 6.0% in 2022. With interstate travel allowed, we expect the service sector to benefit and grow 7.1% for 2022,” he said in a statement yesterday. a research note.

However, he said downside risks to the revival of consumer spending remained under the radar, such as the new Covid-19 variant, the impacts of climate change, the weak labor market recovery and the surge. 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, steady inflationary pressure and improving labor markets.

He said the recovery momentum was in line with the reopening of domestic economic activities and interstate travel amid higher immunization rates.

“Looking forward, we expect the private consumption and services sector to contribute positively to gross domestic product growth in the fourth quarter of 2021,” he said.

In addition, motor vehicle sales have a bright outlook 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 auto fuel, food and drink, and stalls and markets, among others, has improved significantly.

In addition to retail trade, motor vehicle sales remained on an expansionary path amid sales tax exemptions and an improving 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.

“Steady employment growth and stable inflationary pressure should benefit and support Malaysia’s consumer spending in the fourth quarter of 2021 as well as in 2022,” he said.

Looking ahead, MIDF Research remains cautious that consumer spending activities will be constrained by the upward trend in Omicron-dominant Covid-19 infections in many economies, in addition to high headline inflation from consumer price index and current global supply bottlenecks. – Bernama

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