MIDF Amanah said the outlook was underpinned by several key factors, including a resilient labour market characterised by steady employment and wage growth.
KUALA LUMPUR: MIDF Amanah Investment Bank Bhd’s research arm, MIDF Research, is projecting sustained expansion in domestic spending following stronger retail sales recorded in March.
The research house said, in a note, that the outlook was underpinned by several key factors, including a resilient labour market characterised by steady employment and wage growth, particularly in domestic-oriented sectors, which would continue to support household spending.
“Manageable inflation, alongside an accommodative monetary policy stance and targeted fiscal measures, is expected to further reinforce consumer purchasing power and overall spending confidence.
“Robust domestic demand will likely remain the key pillar of Malaysia’s economic growth, helping to cushion the impact of ongoing external headwinds, including softening global trade and elevated geopolitical risks,” it said.
Additionally, it noted that the tourism sector is poised to play a more prominent role in supporting growth, with strong tourist arrivals and higher spending contributing positively to the services and retail sectors.
However, MIDF Research is cautious about potential downside risks.
Heightened global trade tensions could weigh on both consumer and business sentiment, potentially leading to more restrained spending behaviour.
It noted that while the United States and China had temporarily eased tariffs, uncertainty lingers over the prospects of a mutually acceptable deal – including its scope, timeline and durability.
Similarly, the outcome of Malaysia’s ongoing trade negotiations with US President Donald Trump’s administration remained unclear.
“Although the 90-day tariff pause may offer temporary relief, underlying uncertainty continues to pose a risk to the resilience of retail sales and the broader economic outlook,” it said.
MIDF Research also said that recent policy adjustments, including higher diesel prices and increased utility tariffs, continued to have a contained effect on overall price levels. — Bernama
