PETALING JAYA: Distributive trade appears likely to build on its recent momentum with domestic demand expected to remain resilient through 2026.
This is underpinned by policy support, firm labour conditions and contained inflation supporting household spending, according to BIMB Research.
It projected distributive trade to grow 6% this year, with wholesale and retail activities continuing to expand at a healthy clip.
The research house said wholesale trade is expected to grow by about 6.1% this year, while retail trade is projected to rise 6.5%, supported by sustained fiscal measures and improving demand conditions.
Clarity on fuel subsidy, healthy labour market, steady income growth and fiscal measures including the enhanced Sumbangan Tunai Rahmah assistance, utility subsidies for lower-income households and Visit Malaysia 2026 should provide a meaningful lift to household spending,” it said.
BIMB Research pointed out that the services sector is set to remain a key growth anchor.
“Contained inflation, helped by a firmer ringgit, should preserve purchasing power, reinforcing a constructive consumption outlook as the economy progresses through 2026,” it added.
The country’s distributive trade rebounded sharply last December, marking a clear year-end acceleration after softness in November.
For 2025, distributive trade expanded 6.1% year-on-year (y-o-y, underpinned by retail (6.1%) and wholesale (5.8%), as motor vehicles moderated to 3.2% after a strong 2024.
The record December spike in auto sales was largely driven by a buying frenzy of completely built-up electric vehicles ahead of the expiry of tax exemptions.
BIMB Research noted that greater clarity on the RON95 fuel subsidy framework had reduced domestic risks.
“The smooth RON95 fuel subsidy implementation reduces domestic risks as the implementation is less disruptive than initially anticipated,” it said.
Retail trade, in particular, had gained traction since September 2025.
“The announcement of targeted RON95 fuel subsidy measure reduced uncertainties among consumers and boosted consumer confidence higher,” the research house said, highlighting resilient spending at malls, petrol stations and tourist-linked locations, alongside strengthening online and out-of-store retailing.
Meanwhile, an analyst from a local fund management company concurred with the prognosis that domestic demand dynamics this year are on firmer footing thanks to policy clarity, steady income growth and targeted fiscal support to anchor household spending expectations.
“While consumption has proven resilient, the sustainability of momentum will hinge on labour market stability and the extent to which external shocks spill over into household sentiment,” he told StarBiz.
External headwinds remained, with subdued global trade, softer commodity prices and potential volatility in oil markets posing risks to sentiment.
“A well-calibrated subsidy framework, reinforced by targeted cash assistance, steady wage growth and a resilient labour market should help cushion households against the uncertainties,” it said.
A firmer ringgit is also expected to support consumption by lowering the cost of imported goods.
Under a conservative scenario, the currency is projected to average RM4 per US dollar in 2026 from RM4.28 in 2025 to contain imported inflation and support discretionary spending alongside a steady recovery in tourism-driven demand.
