For 2025, TA Research projected private consumption growth of 6.3%.
PETALING JAYA: Malaysia’s retail sector remained resilient in November 2024, as reflected in the latest distributive trade index (DTI) data, but analysts note potential headwinds ahead.
The Statistics Department reported a 3.9% year-on-year (y-o-y) growth in the DTI for November, reaching 158.8 points.
This represented a slowdown from the 5.1% y-o-y growth recorded in October.
On a year-to-date basis, the DTI averaged a 4.4% y-o-y increase for the first 11 months of 2024.
Retail sales continued to drive growth in the distributive trade sector, posting a robust 5.8% y-o-y increase to RM64.8bil in November, according to BIMB Research.
“Malaysia’s distributive trade sector recorded total sales of RM149.3bil in November 2024, marking the second-highest monthly sales of the year,” the research house noted.
BIMB Research highlighted the resilience of consumer demand, attributing growth to robust online sales driven by events such as the 11.11 Singles’ Day, which bolstered eCommerce activity.
Retail sales over the Internet rose 5.2% y-o-y, slightly higher than October’s 5.1% growth.
However, the research house cautioned about a seasonally adjusted month-on-month decline of 4.3% in the index.
Meanwhile, TA Research noted that November’s performance underscores the importance of personal spending as a key driver of Malaysia’s economic growth.
It added that the consistent growth in the DTI suggests personal spending continued to be a major contributor to overall gross domestic product (GDP) growth in the fourth quarter (4Q24).
“Consequently, we maintain our forecast for personal spending growth at around 5% y-o-y in 4Q24, a slight improvement from the 4.8% y-o-y growth recorded in 3Q24,” the research house stated.
However, it warned that GDP growth may be tempered by external headwinds, including weak external demand and challenges in the manufacturing and mining sectors.
For 2025, TA Research projected private consumption growth of 6.3%, driven by a resilient labour market, stable income expansion and contained inflation.
It noted potential tailwinds from higher civil servant salaries and increased tourist arrivals benefiting the retail, food and leisure segments.
However, it said the rationalisation of RON95 fuel subsidies may pose challenges by increasing fuel costs and reducing disposable income for lower- and middle-income households.
“The overall impact will hinge on the timing and scale of subsidy adjustments, as well as the effectiveness of targeted financial aid programmes aimed at protecting vulnerable groups,” TA Research added.
MIDF Research also shared a positive outlook for the sector in 2025, forecasting a 5.2% growth in retail trade, supported by increased employment, rising incomes, higher civil servant salaries and a higher minimum wage.
“For the full-year 2024, we maintain our forecast that retail sales will grow at 5.8% as inflation and the labour market remain stable,” it said.
It noted that the retail sector would benefit from continued recovery in tourist arrivals and government cash assistance.
However, the research house flagged higher cost-push inflation as a potential constraint on consumer spending.
BIMB Research echoed this optimism, projecting a sustained growth of 5.4% for Malaysia’s private consumption and services sector in 2025, driven by favourable labour market conditions and increased tourism activities.
“Phase 1 of the civil servant salary revision effective December 2024 and an increase in the minimum wage from RM1,500 to RM1,700 per month are expected to bolster consumer spending,” the research house noted.
