KUALA LUMPUR (March 14): January's faster wholesale and retail trade growth indicates a rebound in Malaysia's economy, say analysts from MIDF, Kenanga, and Maybank Investment Bank.
Maybank IB said the recent trade data is a boost to the country's gross domestic product (GDP) growth, suggesting a robust 4% year-on-year increase in January 2024. For the whole of 2024, the house estimates a 4.4% GDP growth, spurred by a rise in manufacturing activities and a rebound in exports.
“Together with other indicators like the rise in manufacturing PMI [purchasing managers' index] and January 2024’s export rebound after 10 straight months of decline amid the global tech cycle recovery, these green shoots of economic growth pick up are supportive of our 2024 GDP growth forecast of 4.4%,” it said in a note on Thursday.
Malaysia’s wholesale and retail sales rose 5.4% to RM142.4 billion in January from a year earlier, official data on Wednesday showed. That compares to December’s 4.8% year-on-year increase.
On a month-on-month basis however, distributive trade contracted 1.1% in January, the Department of Statistics said.
Regional economies like Japan, Singapore, and Hong Kong showed mixed retail sales performance at the start of 2024.
Kenanga Investment Bank maintains its 2024 sales growth forecast at 8%, driven by strong domestic demand and a lower unemployment rate.
“This positive outlook is reinforced by the continued increase in tourist arrivals and spending. However, risks to our forecast include the impact of subsidy rationalisation, which could potentially dampen consumer spending and subsequently affect sales growth,” it added.
Additionally, Kenanga holds its 2024 GDP growth forecast at 4.5-5%, banking on a rebound in the manufacturing sector optimistic about the export-oriented segment and China's progressive economic recovery.
MIDF Amanah Investment Bank meanwhile forecasts a 7.5% expansion in retail trade for 2024, citing resilient labour market, positive real wage growth, improved tourism activities, and accommodative economic policies.
However, the house cautioned of potential softening retail trade growth and consumer sentiment, coupled with concerns over inflation risks.
Retail sales growth rate was lowest in over two years at 2.6% year-on-year, MIDF noted, flagging declining e-commerce transactions despite steady employment growth and a lower jobless rate.