Malaysia retailers see higher sales growth of 5.3% in 2018

The Malaysia Retailers Association's members are hopeful that their businesses will recover by the second quarter of 2018.

KUALA LUMPUR: The Malaysia Retailers Association (MRA) forecasts retail sales to be 5.3% for 2018, an improvement from the 4.7% growth in its March survey, boosted temporarily by the zero Goods and Sales Tax in June. 

The MRA said for the first quarter of 2018, the Malaysia retail industry recorded a below-than-expected growth rate of 2.6% in retail sales versus the 3.1% in October to December last year and 1.2% growth a year ago.

“Despite poor performance recorded a year ago (-1.2% in Q12017), the Malaysia retail market remained subdued early this year. Shoppers were still careful in their spending on festive goods during the Chinese New Year period,” it said on Wednesday.

The MRA said except the supermarket and hypermarket sub-sector, all retail sub-sectors recorded improvement in their retail businesses during the first quarter of 2018. 

It said its members are hopeful that their businesses will recover by the second quarter of 2018. They projected an average growth rate of 6.0%. The change in ruling party after the general election on May 9, 2018 is expected to boost consumers' confidence level and increase their willingness to spend. 

At the same time, the largest festival in Malaysia, Hari Raya, will be celebrated in June this year. 

“The department store cum supermarket operators are expecting a better performance with a growth of 4.6% for the second quarter of this year. 

“The department store operators are expecting to sustain their businesses with a growth rate of 4.7% for the second three-month period of this year,” it said. 

On the other hand, supermarket and hypermarket operators will not see improvement in their business in the coming months. They expect to remain in the red zone with a -4.4% growth rate for the second quarter of 2018.

The Retail Group Malaysia adjusted the Q2 retail growth rate from 3.7% (estimated in March 2018) to 6.3%. 

This revision is also higher than the latest projection made by MRA members. This new estimate took into consideration the tax holiday during the last month (June) of second quarter as well as Hari Raya celebration at the middle of June 2018.

The retail sale growth rate for third quarter has also been revised from 5.2% (estimated in March 2018) to 6.8%. This revision took into consideration the remaining two months of tax break before Sales and Services Tax (SST) is to be re-introduced from 1 September 2018.

“For the last quarter of this year, the retail growth rate has been revised downwards from 5.0% (estimated in March 2018) to 3.5%. 

“This lower adjustment is needed to reflect higher consumers' spending during the three-month period with zero-rated GST. Major purchases are expected to have been made from June to August of this year,” it said.