M’sia’s solid distributive trade signals stronger domestic spending

KUALA LUMPUR: Malaysia distributive trade reached a new record high in April, with analysts believing that this continuous solid performance of distributive trade signals stronger domestic spending.

MIDF Research, the research arm of MIDF Amanah Investment Bank Bhd, in its economic review, opined that the continous solid performance of distributive trade in April signals stronger domestic spending is in play and hence, would drive Malaysia’s economy into better position in 2017 compared to last year.

“Strengthening domestic spending coupled with steady wage growth and stellar external sector performance, we opine Malaysian economy will be able to expand 4.9 per cent in 2017,” it said.

The research team also forecast private consumption and services sector to grow at 6.3 and 5.3 per cent respectively for 2017.

Meanwhile, MIDF Research noted that distributive trade and retail trade expanded by 9.6 per cent year-on-year (y-o-y) and 12.9 per cent y-o-y respectively in April 2017, the highest since May 2014.

It added, as for other components of distributive trade, wholesale trade and motor vehicles increased by 8.6 per cent y-o-y and 4 per cent yo-y respectively, significantly better than previous year average.

“In the run-up to Ramadhan and Eid, we believe consumers decided to shop for the preparation of the upcoming festive events. Besides, better performance in our economic activities and stable job market could be the reasons supporting the surge in the distributive trade.

“Continous solid performance of distributive trade reflects robust domestic spending in our economy,” it said.

It also noted that motor vehicles, wholesale trade and retail trade cover about 14.6 and 27 per cent collectively of Malaysia’s services sector and total GDP in the first quarter this year.

“Solid performance of distributive trade in April provides a good signal for better performances of private consumption and services sector in the second quarter 2017.

“In addition, we expect distributive trade will continue to record solid growth in May and June as consumers will most likely to increase their spending on food, clothing and apparel for Ramadhan and Eid celebration,” it commented.