Retail sales in Malaysia are projected to improve in Q1 2025 after a weaker than expected growth of 3.5% in Q4 2024. Optimism stems from celebrations and school holidays, despite challenges such as rising living costs and operational expenses due to policy changes. RGM has revised its retail sales growth forecast for 2025 to 4.3%.
According to Retail Group Malaysia (RGM), Malaysia’s retail sales are expected to improve in the first quarter of 2025 after a disappointing performance in the last quarter of 2024. The retail sector recorded a growth of 3.5% from October to December 2024, which fell short of the anticipated 4.4% and was also lower than the 3.8% increase seen in the previous quarter. Factors contributing to this decline include the rising cost of living and reduced school holidays.
Despite the recent slowdown, retailers remain optimistic, especially with the upcoming Chinese New Year celebrations and school holidays anticipated to spur demand. RGM indicated that department stores, supermarkets, and fashion sectors are gearing up for a rebound in sales during the first quarter of 2025.
Unemployment rates stabilized at 3.2% at the end of 2024, close to the full employment threshold of 3%. Inflation was reported at a manageable average of 1.8%, yet consumers are facing the prospect of higher living costs. This is primarily due to upcoming policy changes, including the reduction of subsidies on RON95 petrol and increased electricity tariffs set to take effect in mid-2025.
RGM highlighted concerns about the potential impact of these policy measures, noting that while a majority of Malaysian households will continue to receive electricity subsidies, elevated operational costs for businesses may lead them to pass these expenses onto consumers. The forecast for retail sales growth in 2025 has been revised upward to 4.3%, reflecting greater optimism compared to the 4.0% prediction made in November 2024.
In summary, while Malaysia’s retail sector faced challenges in late 2024 due to economic factors, there is an optimistic outlook for early 2025 driven by significant cultural events. Economic indicators such as steady unemployment and manageable inflation may support consumer spending, despite anticipated increases in living costs. Retailers are preparing for a recovery, although concerns about rising operational costs and market closures persist.
Original Source: theedgemalaysia.com
