KUALA LUMPUR (Nov 30): The Malaysia retail industry jumped 96% year-on-year in retail sales in the third quarter of 2022.

In the November 2022 Malaysia Retail Industry Report released on Wednesday (Nov 30) by Retail Group Malaysia (RGM), it said the figure was beyond market expectation.

It said members of Malaysia Retailers Association (MRA) and Malaysia Retail Chain Association (MRCA) had projected the third quarter growth rate at 61.7% in September 2022.

Meanwhile, RGM had estimated the quarterly growth rate at 50%.

RGM said that during the same period a year ago, retail industry contracted by 27.8%.

It said a majority of retailers were forced to shut down during the first half period of the third quarter of 2021.

The Enhanced Movement Control Order (EMCO) was enforced in a large part of Selangor and selected locations in Kuala Lumpur from July 3, 2021 and ended on July 16, 2021.

RGM said retail businesses in the largest retail market of Malaysia were badly hit during this critical period.

It said from Aug 16, 2021, more retail businesses under National Recovery Plan (NRP) Phase 1 had been allowed to open.

They included fashion shops, jewellery shops, electrical and electronics shops, furniture shops, sports shops, car accessories shops, hair salons, barber shops and car showrooms.

When the government relaxed restrictions on the number of passengers in a vehicle as well as the limit on travelling distance on Aug 21, 2021, shopping traffic in major shopping centres gradually returned.

Cinemas, entertainment centres and beauty salons were allowed to open from Sept 9, 2021 for fully vaccinated individuals.

RGM said the strong performance during this quarter was due mainly to the low base effect a year ago.

During the third quarter of last year, Malaysia economy contracted by 4.5%.

The recovery of domestic demand also contributed to the higher growth rate.

The average inflation rate during the third quarter of 2022 jumped much higher to 4.5%.

Once again, the increase surpassed the average inflation in Malaysia for the period of 2011 to June 2022 at 2% only, said RGM.

Going forward, RGM said members of the two retailers’ associations project an average growth rate of 13.9% for the fourth quarter of 2022.

It said retailers in other specialty stores sub-sector (including photo shops, optical stores, second-hand goods stores, store retailing musical instruments, health equipment stores, arts and craft as well as direct selling firms) remain optimistic for this period.

It said they expect their businesses to increase by 6.6% during the next three-month period.

In September this year, RGM estimated a 31.7% growth rate in retail sale for 2022.

However, it said this projection needs to be revised upwards again, taking into consideration the better-than-expected growth during the third quarter as well as a revision of fourth quarter estimate.

RGM said that for the fourth quarter of 2022, the growth rate estimate has been revised upwards from 1% (estimated in September 2022) to 6%.

It said this is lower than the forecast made by members of retailers’ associations (at 13.9%).

This lower revision takes into consideration the high base a year ago (at 26.5%) as well as the current challenges of Malaysia retail industry, it said.

Nevertheless, it said retailers in Malaysia are hopeful that retail industry will continue to recover at end of this year due to two upcoming major festivals — Christmas and Chinese New Year at end January 2023.