KUALA LUMPUR: Sales at Aeon Co (M) Bhd, Isetan of Japan Sdn Bhd and other local retailers will probably rise at a faster pace this year as economic growth accelerates, an industry survey showed.
Retail sales may increase 7% to RM58.7bil this year after growing 6.2% to RM54.9bil in 2005, according to a survey by the 100-member Malaysian Retailers Association.
“The strong recovery of regional economies and the upturn of the global electronics industry will stimulate the national economy and consumer spending this year,” said Tan Hai Hsin, director of Retail Group Malaysia, which conducts surveys on behalf of the association.
“The overall environment is better than last year,'' Tan said.
Malaysia is counting on rising global demand for electronics such as Apple Computer Inc's iPod digital players to boost growth this year.
The central bank expects growth to accelerate to 6% this year from 5.3% in 2005, on higher electronics and oil exports and Government spending.
Still, rising inflation may limit retail sales gains, as higher fuel costs lead to increased prices of goods and services, leaving consumers with less to spend, the survey showed.
The forecast of 7% growth this year was lower than an earlier estimate of 8%, Tan said.
Retail sales grew 6.2% in 2005, less than an earlier forecast of 6.5%, after the Government raised fuel prices three times last year, resulting in more expensive essential goods and transportation.
“For the first time since the Asian financial crisis, many Malaysians started to cope with the rising cost of living by changing their spending patterns and adjusting their lifestyles,'' Tan said.
Retailers expected sales to gain 4.4% in the first quarter of 2006 from a year earlier, slower than the 6.6% pace recorded in the previous quarter, the survey showed.
The Malaysian Institute of Economic Research's Retail Trade Index fell to 88.4 points in the first quarter, suggesting “that the strong pace of consumption spending seen over the past two years is likely to slow,'' the institute said last month.
Higher domestic energy prices and a possible increase in power rates may hurt growth in the retail industry, it said.
“Take-home pays have not increased in tandem with the rising prices of goods and services,'' Tan said. “Consumers are now having relatively lower living standards.''
Malaysians may also put more money in the stock market instead of shopping as the nation's bourse performed better and the Government eased rules on short-selling, he said. – Bloomberg