KUALA LUMPUR (Aug 13): Malaysians are expected to keep spending in the second half of 2026 (2H2026), although some households may become more cautious as living costs rise. Economists say spending is being supported by low inflation, rising wages and a strong job market.
Universiti Teknologi Mara professor of tourism economics Dr Mohd Hafiz Hanafiah told The Edge that contained inflation and improving real purchasing power will support spending even as it moderates.
“The volume index real growth is still respectable. With headline inflation at just 1.9% in June, households are seeing genuine real income gains where their wages are rising faster than prices,” he said.
Still, Mohd Hafiz cautioned that June’s 10.1% year-on-year growth in wholesale and retail trade should be interpreted carefully, as the period coincided with Aidiladha and the school holidays, which supported domestic travel and spending.
Putra Business School associate professor Ida Yasin, however, viewed the latest data as a clear sign of stronger consumer spending, saying the expansion was unlikely to be driven mainly by festive and school holiday effects.
She said the durability of household spending in the coming months would ultimately depend on employment and incomes.
“As long as people have the money to spend, meaning they still have a job and they still have a salary to earn, they will spend or buy goods and services,” she said.
Philip Research said beyond low unemployment, rising wages support household spending. Manufacturing wages rose 3.1% year-on-year in 2Q2026, while services wages increased 4.8%.
MBSB Research expects retail sales growth to slow to 5.5% in 2026, from 6.1% last year, as festive spending fades.
Pantheon Macroeconomics also expects retail sales growth to ease to 3.7% by year end, mainly due to rising food prices, although government subsidies and aid are expected to support household spending.
Separately, tourism could provide another source of support for retail spending in 2H2026, though Mohd Hafiz cautioned against attributing June’s retail growth directly to Visit Malaysia 2026.
He noted that the Department of Statistics Malaysia’s retail trade data do not distinguish between spending by residents and foreign visitors, making it difficult to quantify tourism’s contribution.
“What we can say is that the composition is suggestive,” he said, pointing to stronger automotive fuel and food and beverage sales, which are consistent with greater mobility.
“But domestic school holidays produce exactly the same signature. Tourism does support retail at the margin, but it will not be the main engine,” he added.
Pantheon noted that tourist spending increased 15.8% year-on-year in the first quarter, even though tourist arrivals rose just 2.5%, while foreign credit-card spending has been growing faster than domestic spending.
For Mohd Hafiz, the bigger opportunity for Visit Malaysia 2026 is therefore not merely increasing arrival numbers, but raising expenditure per visitor through longer stays and higher-value tourism offerings.
He also sees domestic tourism as an important stabiliser, as spending on local accommodation, food, fuel and retail is more likely to remain within the domestic economy.
MBSB Research likewise expects tourism to provide support to the transport, hospitality and retail sectors, although geopolitical tensions, elevated airfares and jet fuel costs could weigh on inbound travel.
Meanwhile, Malaysia’s official second-quarter gross domestic product (GDP) growth figure will be released on Friday, Aug 14, alongside Bank Negara Malaysia’s assessment of the economy.