Malaysia’s Retail Sales Set for Recovery Amid Challenges

Following a weaker-than-expected fourth quarter in 2024, Malaysia’s retail sales are projected to accelerate in early 2025. Retail sales grew by 3.5% in the last quarter of 2024, below expectation. Optimism remains for a boost due to Chinese New Year and school holidays. However, challenges persist with rising operational costs and ongoing international franchise boycotts.

Malaysia’s retail industry is poised for growth in the first quarter of 2025, despite a weaker-than-anticipated performance in the last quarter of 2024. According to Retail Group Malaysia (RGM), retail sales during October to December 2024 increased by 3.5%, falling short of the 4.4% previously anticipated and trailing behind a 3.8% rise from the July to September period. This subdued outcome can be attributed to the escalating cost of living and reduced school holidays.

However, optimism prevails among retailers for a boost driven by the Chinese New Year and upcoming school vacations. RGM notes that department store and supermarket operators, as well as fashion sectors, are especially focused on achieving a strong recovery this quarter.

In terms of employment, Malaysia’s unemployment rate remained stable at 3.2% towards the end of 2024, closely aligning with the 3% mark that signifies full employment. The inflation rate averaged a manageable 1.8% during the same timeframe. Despite these positive indicators, consumers are preparing for increased living expenses due to several policy adjustments, including a subsidy reduction for RON95 petrol and rising electricity tariffs anticipated by mid-2025.

RGM expressed that while 85% of Malaysian households will continue receiving government electricity subsidies, businesses must cope with higher operational costs. This may necessitate passing such expenses onto consumers, thereby impacting retail pricing. The firm has subsequently revised its retail sales growth forecast for 2025 upwards to 4.3%, up from the previously stated 4.0%. In 2024, retail sales experienced a growth of 3.8%.

Yet, food and beverage operators face challenges due to rising operational costs exacerbated by a weak ringgit, which inflates the costs of raw materials and ingredients. Additionally, ongoing boycotts against certain international franchises due to the conflict in the Middle East may lead to further temporary and permanent closures across the nation, limiting business prospects.

In summary, Malaysia’s retail market is expected to recover in 2025’s first quarter despite a disappointing end to 2024. With a steady unemployment rate and manageable inflation levels, the outlook is cautiously optimistic, albeit overshadowed by rising costs and potential closure of outlets due to ongoing boycotts. Overall, the retail sales growth forecast for 2025 has been revised to reflect a stronger recovery trajectory.

Original Source: theedgemalaysia.com

About Marcus Chen

Marcus Chen has a rich background in multimedia journalism, having worked for several prominent news organizations across Asia and North America. His unique ability to bridge cultural gaps enables him to report on global issues with sensitivity and insight. He holds a Bachelor of Arts in Journalism from the University of California, Berkeley, and has reported from conflict zones, bringing forth stories that resonate with readers worldwide.

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