Malaysia’s retail sales are expected to grow in Q1 2025 after a 3.5% increase in Q4 2024, lower than projections. Optimism exists due to festive celebrations and steady consumer employment, despite rising living costs and operational challenges. Retail sales growth forecast for 2025 raised to 4.3%.
Retail sales in Malaysia are projected to grow in the first quarter of 2025, recovering from underwhelming results in the fourth quarter of 2024. According to Retail Group Malaysia (RGM), sales increased by only 3.5% from October to December 2024, falling short of the anticipated 4.4% and below the 3.8% growth from the third quarter. This decline is attributed to higher living costs and shorter school holidays.
Despite the slower growth, retailers remain optimistic, expecting a boost during the Chinese New Year and school holiday periods. RGM reports that department and supermarket operators, along with fashion retailers, anticipate a stronger recovery. The industry remains proactive in addressing these opportunities.
Malaysia’s unemployment rate stabilized at 3.2% towards the end of 2024, close to the full employment threshold of 3%. Inflation remained manageable at an average of 1.8% for the quarter. However, households are preparing for increased living costs due to upcoming policy changes, including rationalized subsidies for RON95 petrol and higher electricity tariffs set for 2025.
RGM highlighted that while many households will continue receiving government electricity subsidies, increased operational costs for businesses will likely be passed onto consumers. The retail sales growth forecast for 2025 has been revised to 4.3%, an increase from a previous estimate of 4.0%. In 2024, retail sales achieved a 3.8% rise.
Moreover, food and beverage operators are facing challenges due to rising operational costs and a depreciating ringgit, which escalates raw material prices. Ongoing boycotts against certain international franchises stemming from geopolitical tensions may further affect the retail landscape, possibly resulting in more temporary and permanent store closures.
In conclusion, Malaysia’s retail sector shows signs of recovery after a disappointing fourth quarter in 2024. Analysts anticipate growth, bolstered by upcoming celebrations and holidays, despite challenges such as rising operational costs and inflation. The revised retail sales forecast signals a positive outlook for the coming year, though constraints from international disputes and local economic policies may still pose risks.
Original Source: theedgemalaysia.com
