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KUALA LUMPUR, Dec 16 ― Malaysia’s retail industry recorded 1.6 per cent growth up to September this year, lower than estimated, and the situation is likely to stagnate next year, Retail Group Malaysia said in its latest report.
According to the report released today, consumers have grown more cautious in spending after the introduction of the Goods and Services Tax (GST) in April, and doubly so as the ringgit continues to slide, factors that have hit the retail sector hard.
Retail sales dropped to a staggering -11.9 per cent from April to June but rebounded during the Hari Raya celebrations, only to drop again to 1.6 per cent. The overall sales from January to September only grew by 1 per cent.
“Malaysia retail industry had yet to recover from the negative impact of Goods & Services Tax (GST) on consumers' spending. The unexpected drop in ringgit value worsened it.
“This quarterly performance is above the average growth rate of 0.1 per cent forecasted by members of MRA in August 2015, but below the expected growth rate of 2.5 per cent calculated by Retail Group Malaysia,” the report stated.
Retail Group Malaysia also claimed that consumer sentiment was severely affected by the “political development” in the third quarter, but did not elaborate.
“The political development in Malaysia affected retail sales indirectly during the third quarter. The political situation was affecting the consumer sentiment level and buying mood of Malaysian consumers.
“As a result, they were spending less,” the retail research firm said in its report.
The firm added that while consumers are likely to spend a bit more during the end of year school holidays this quarter, it expected a sales growth of no more than 1.3 per cent.
Department and supermarket store sales is expected to drop to -2.6 per cent while department stores believe their sales in the last quarter would remain in the red, forecasting a negative growth rate of 12.2 per cent.
But supermarket and hypermarket operators are expected to rebound from two consecutive quarterly decline with a 2.2 per cent recovery growth rate for the fourth quarter of 2015.
Consumers' fashion sentiment also appeared to be unperturbed by the gloomy economic outlook as retailers in the fashion and fashion accessories sector said they expect their businesses to maintain the recovery momentum with a positive growth of 4.4 per cent during the last three-month period of 2015.
Other specialty stores ― which includes retailers selling photographic equipment with photo processing services, sports-related goods, children-related goods, optical products, second-hand goods, souvenirs and gifts, toys as well as restaurants ― are hopeful of keeping their growth at 6.0 per cent for the final quarter of 2015, as compared to the same period last year.
* A previous version of this story erroneously referred to Retail Group Malaysia as the Malaysian Retail Association and has since been rectified.