What lies ahead?

Business performance in 3Q17 is expected by the Department of Statistics Malaysia to increase with confidence indicator 11.9 per cent contributed by industry (3.1 per cent), wholesale and retail trade (27.3 per cent) and services (24.0 per cent) sectors.

According to MIDF Research, this was an improvement since 1Q this year which saw one of the worst negative growth at 6.9 per cent.

“The upbeat momentum from first half is expected to carry on into the second half of the year indicating favourable investment climate for businesses,” the research arm said.

For the retail industry, RGM reported that members of the retailers' association were not optimistic on their businesses in 3Q17, as they estimated an average growth rate of 2.9 per cent during these three months.

According to RGM, for 3Q17, the department store cum supermarket operators are expecting a decline of 2.5 per cent in growth rate and the department store operators are projecting that their businesses will dip with a negative growth rate of 1.5 per cent.

On the other hand, supermarket and hypermarket operators are expecting to maintain their businesses with a 0.8 per cent growth rate for 3Q17.

Other sub-sectors had a more favourable outlook for the period with retailers in the fashion and fashion accessories sector expecting their businesses to recover with a positive growth of 6.1 per cent while pharmacy and personal care retailers are expecting to maintain their growth at 7.2 per cent.

Similarly, retailers in the other specialty stores sub-sector are hopeful of their businesses in the coming months, expecting an expansion of 5.6 per cent as compared to the same period a year ago.

As for the rest of 2017, with consideration of the last results, RGM revised its annual growth forecast downwards from 3.9 per cent to 3.7 per cent for Malaysia retail industry in 2017.

“This is the second revision since end of last year,” the group said. “Based on this latest revision, the total sale turnover for Malaysia retail industry in 2017 is estimated at RM 101.4 billion.”

RGM's revision of the 3Q growth rate estimate from five per cent (made in June 2017) to four per cent is higher than the latest projection made by MRA members.

“Fourth quarter growth rate's estimate remains at 5.5 per cent, taking into consideration the growth of 0.3 per cent achieved during the same period a year ago.

“For the rest of this year, the rise of our purchasing power will continue to fall behind the increase in prices of retail goods. More retail goods are expected to raise prices because of higher fuel prices in recent months.