Malaysia's retail sales continued to grow in July 2024, albeit at a slower pace, as the country's domestic spending saw a sustainable increase. According to the latest report, the retail trade grew by 6.4% year-on-year (yoy), marking a slight moderation compared to previous months. However, overall distributive trade expanded by 6.7% yoy, supported by encouraging sales in motor vehicles and wholesale trade, which rose by 12.2% and 5.5% yoy, respectively.
In seasonally-adjusted terms, the volume of distributive trade posted a 5.3% yoy increase, up from 4.3% in June. This growth was particularly driven by a rebound in motor vehicle sales, which saw an 8.7% yoy rise following a slight decline in June, as well as stronger growth in wholesale trade, which grew by 5.1% compared to 3.1% in June.
Improved Airport Passenger Movements
The recovery in air travel continued to show positive momentum, contributing to the overall economic outlook. As of the first seven months of the year (7MCY24), Malaysia Airports Holdings Berhad (MAHB) recorded a recovery rate of 88.5% compared to 2019 levels. This was largely driven by increased domestic passenger movements, which reached 85.2% of pre-pandemic levels, and the continued recovery in international travellers, now at 91.6% of 2019 figures.
Retail Trade Expected to Grow by 5.0% in 2024
For the first seven months of the year, Malaysia's distributive trade sales increased by 6.0%, supported by a 9.3% yoy rise in motor vehicle sales, alongside continued growth in retail trade (+6.3% yoy) and wholesale trade (+4.8% yoy). However, projections suggest that retail trade will grow by 5.0% for the full year, a more modest increase compared to 9.0% in 2023. The slower growth outlook reflects a combination of factors, including rising income and employment levels, the recovery in tourist arrivals, and government policy measures such as increased cash assistance for the B40 income group.
Challenges Ahead: Consumer Sentiment and Rising Costs
Despite the positive growth trends, consumer sentiment remains cautious due to concerns over rising living costs and policy changes. While core CPI inflation stayed stable at around 1.9% yoy from April to July 2024, consumers continue to highlight increasing prices as a key concern. The government's plans to further rationalise subsidy allocations, particularly a shift to targeted subsidies for RON95 fuel, may also weigh on consumer confidence.
Additionally, there are signs of a slowdown in personal loans and credit card loans, which grew at more moderate rates of 4.4% yoy and 7.8% yoy, respectively, in July, in line with the more measured growth in retail trade.
Looking ahead, the positive labour market conditions, higher tourist arrivals, and flexible access to retirement funds are expected to continue supporting the distributive trade sector. However, the broader outlook will depend on how consumer sentiment evolves in response to rising costs and government policy decisions.
Source: MIDF
Title: Retail Sales Continued to Grow Albeit Moderating to +6.4%yoy in Aug-24