Growth of consumer spending in Malaysia

Consumer spending remains on expansionary path in Malaysia with an upward trend that is giving hope. Malaysia’s distributive trade sales growth moderated at +3.5%yoy in Dec-21.

All three components continue recording positive growth led by motor vehicles (+1.5%yoy), wholesale (+4.1%yoy) and retail (+3.5%yoy).

Despite of moderating trends, all components improved on sequential month basis. Expansion of distributive trade sales among others fueled by modest recovery in labour market and reopening of domestic economic activities. The dragging factors could be due to high inflationary pressure perception and flood effects.

Adapting with new normalcy

Automotive fuel share is expected to rebound to its pre-pandemic level at 3.4% (2021: 3.1%) as interstate movements allowed.

In addition, the government firmed its position of not imposing nationwide lockdown amid significantly high vaccination rate.

“We opine retail spending patterns to shift slightly from pre-pandemic years especially on ICT and household items, among others thanks to remote working and learning arrangements. We forecast retail trade to expand by +5.5% in 2022.

“Relaxations of containment measures, economic reopening and progressive improvements in macroeconomic data are staging for a strong consumer spending in 4QCY21 as well as for 2022. We forecast private consumption to expand by +6% by 2022. With interstate travels allowed, we project services sector to benefit and increase by +7.1% for 2022,” says MIDF.