KUALA LUMPUR (Nov 12): A pickup in consumer spending in September points to Malaysia’s robust domestic demand that will likely carry through the final months of 2025.
Private consumption, driven by steady labour market conditions and boosted by a government cash handout, is expected to anchor broader economic growth at a time of soft external demand, economists said following Wednesday’s (Nov 12) release of retail and wholesale trade data.
“Encouragingly, the ongoing uptrend sets a positive tone ahead of Visit Malaysia 2026, with continued tourist inflows expected to provide an additional lift to retail activity, service industries and overall domestic demand in the coming quarters,” BIMB Securities said.
Data out on Wednesday showed wholesale and retail trade growing in September at its fastest pace in 14 months, partly driven by Sumbangan Asas Rahmah aid that boosted grocery sales and leisure spending in conjunction with school and public holidays.
Internet sales were also higher thanks largely to the 9.9 online sale event which spurred consumer demand and contributed to higher transaction volumes across e-commerce platforms. Inflation, meanwhile, has remained benign amid mild underlying price pressures.
Still, external downside risks to the economy persist from US tariffs and their impact on broader external demand, MBSB Research and Kenanga Investment Bank flagged.
Further subsidy withdrawals may also temper near-term spending, MBSB Research said.
The government is now looking to rationalise subsidies for basic goods such as sugar, rice and cooking oil though any changes will be in phases and gradual.
Malaysia has been scaling back its long-running subsidy programme that shields consumers from global price spikes for essentials like petrol and sugar. Economists, however, argue that the sizeable annual allocations are wasteful and should be redirected towards economic development.
Since Sept 30, Malaysia has rolled out targeted subsidies for RON95 petrol, allowing citizens to purchase up to 300 litres of the most widely used fuel per month at the subsidised price of RM1.99 per litre. Last year, the government withdrew the diesel subsidies.