Thursday 28 Mar 2024
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KUALA LUMPUR (Sept 12): Malaysia's retail industry reported a year-on-year (y-o-y) growth rate of 4.5% in retail sales in the second quarter of 2019 (2Q2019), according to Retail Group Malaysia (RGM).

In its September 2019 Retail Industry report, RGM said this latest quarterly result did not meet market expectation.

It said members of Malaysian Retail Association projected the second quarter growth rate in June 2019 at 5.5%.

Hence, it said this latest result was 18% below market expectation.

Having said that, RGM explained that a year ago, retail sale growth rate was only 2.1%.

It said during the month of June 2018, the goods and services tax (GST) was reduced from 6% to 0%.

“Hari Raya was also celebrated during the same month a year ago. However, Malaysian consumers did not go all out to spend on all kinds of retail goods mainly because they did not have extra incomes to do so.

“Hari Raya, the largest festival in Malaysia, was celebrated earlier this year as compared to 2018.

“As a result, spending by Malaysians on this festival started earlier. This had boosted retail spending to a certain extent,” it said.

RGM said uncertain economic prospects due mainly to external factors had discouraged Malaysian consumers to buy more.

It said for the first six months of this year, the retail sale growth rate was 4.2%, as compared to the same period a year ago.

On the outlook for the next three months, RGM said members of the retailers’ association maintain their positive outlook on their businesses in the next three months.

It said they estimate an average growth rate of 3.2% during the third quarter of 2019.

RGM said department store cum supermarket operators anticipate their businesses to improve further with 9.6% in growth rate for the third quarter of this year.

It added that this is the highest projection among the retail sub-sectors.

RGM said department store operators are expecting their businesses to turnaround with a positive growth rate of 4.6% for the third three-month period of this year.

Meanwhile, supermarket and hypermarket operators are unable to stop their continuous decline in the next quarter.

“For the third quarter of 2019, they forecast a contraction of 8.9% in retail growth rate,” it said.

For the remainder of 2019, RGM said the Malaysian retail industry performance continues to be affected by both internal and external market environment.

“Within the country, slow economic momentum and limited policies to stimulate consumers' spending hamper the growth of retail stores. 

“Trade disputes among major economies led to slower export growth, declining stock market performance and weakening local currency.

“All these resulted in low consumers' confidence level, uncertain future job prospects and unwillingness to spend more,” it said.

Given these factors, RGM has maintained a retail growth rate of 5.8% in the fourth quarter of 2019 and forecasts a growth of 4.4% for the full year.

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