KUALA LUMPUR, July 8 — MIDF Research expects Malaysia’s retail trade sales to expand by +10.5 per cent this year.

In a note today, the research house said private consumption is projected to grow by +7.2 per cent in 2022, a rebound from +1.9 per cent in 2021 and -4.2 per cent in 2020, underpinned by an improving labour market, stable inflationary pressures and fiscal incentives.

"We believe the pent-up demand will continue until the end of this year provided that no significant change in overall inflationary pressures.

"With the reopening of international borders, tourism activity will improve modestly yet still below pre-pandemic levels,” it said.

MIDF Research also said pent-up demand with supportive fiscal incentives and macro conditions were driving retail trade performances in 2022.

"Looking at a month-on-month (m-o-m) percentage basis, overall retail trade jumped +5.1 per cent with all sub-components recorded positive expansion rate and most notably, spending on automotive fuel up +10.1 per cent m-o-m amid the festive season and school holiday period,” it said.

Moving forward, the research house said domestic spending is forecast to stay on an upward momentum underpinned by strong and supportive economic fundamentals.

Commenting further on distributive trade sales growth, MIDF Research said the overall price pressure in Malaysia remained stable despite the increasing food inflation, thanks to the capped retail fuel prices.

"Looking ahead, we expect the private consumption and services sector to contribute stronger in the second quarter and second half of 2022’s gross domestic product growth amid strong and sound domestic demand,” it said.

According to data released by the Department of Statistics Malaysia today, the country’s wholesale and retail trade has set a new sales record in May 2022, growing by 19.9 per cent year-on-year to RM129.8 billion, the highest sales recorded since 2013.

Besides that, MIDF Research also expects airport passenger movement to stay in gradual recovery mode in the second half of this year, particularly driven by further improvement in domestic flights and a slight uptick in international arrivals.

"Our view is that the earliest for passenger traffic to reach 2019’s level is only by 2024,” it added. —