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KUALA LUMPUR, Aug 11 (Bernama) -- MIDF Research has upgraded its retail trade growth forecast to 17.6 per cent for 2022, up from 10.5 per cent previously, on the expectation of stronger gross domestic product (GDP) growth in the second quarter (Q2).
In a note, the research house said Malaysia’s consumer spending is expanding strongly as reflected in the retail trade sales growth of 19.1 per cent year-on-year (y-o-y) in the first half of 2022 (H1 2022).
Malaysia’s distributive trade sales expanded by 44.0 per cent y-o-y in June 2022, the fastest pace in 14 months.
As for Q2 2022, distributive trade sales grew by 26.3 per cent y-o-y (Q1 2022: 8.6 per cent y-o-y).
"Most notably, domestic demand continued to stay on an uptrend contributed by improving labour market, stable inflationary pressure, further reviving of the domestic economy including international borders reopening and special Employees Provident Fund withdrawals in April 2022.
"Looking ahead, the upbeat momentum of domestic demand is set to continue in the second half of the year, particularly driven by stable overall price growth and lower unemployment rate," it said.
MIDF believes the pent-up demand will continue until the end of this year, underpinned by an improving labour market, stable inflationary pressure and the continued reopening of the domestic economy.
"Even though the overnight policy rate (OPR) is on an upward trajectory, we believe it would have minimal effect on domestic spending. The OPR is set to reach 2.50-2.75 per cent by end of this year, still below 2019’s level of 3.00 per cent," it noted.
Malaysia’s monetary policy is on a normalisation process rather than tightening, possibly to reach 3.00 per cent by the middle of next year, MIDF said.
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