Stronger domestic spending, solid trade to elevate M’sia’s economy

KUCHING: Malaysia’s solid performance of distributive trade in the first quarter (1Q) signals stronger domestic spending is in play and hence will drive Malaysia’s economy into better position in 2017 compared to last year, observed the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research).

In its Economic Review report, the research team commented, “Given the strengthening domestic spending coupled with stellar external sector performance, we opine Malaysia economy will be able to expand 4.9 per cent in 2017.

It highlighted that distributive trade hits highest growth in almost two years, with distributive trade and retail trade expanding by 8.9 and 11.8 per cent y-o-y respectively in March this year, the highest since March 2015.

“Solid performance of the distributive trade signals robust domestic spending in our economy.

“We expect Malaysia’s private consumption and services sector to grow by 6.3 and five per cent respectively in 2017,” it said.

As for other components of distributive trade, it noted that wholesale trade and motor vehicles increased by eight and 4.2 per cent y-o-y respectively in March.

“We opine positive economic activities, strengthening labour market and stable wage growth among factors that drive up distributive trade performance in 1Q17.

“Hence, this will translate into high growth in private consumption and overall services sector,” it opined.

Meanwhile, it pointed out that Malaysia’s retail sales was the highest among major economies in March.

It noted that Malaysia continued to be the best performer in retail sales in the Asean region by registering 11.8 per cent y-oy in the last month of the first quarter 2017.