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FOLLOWING a challenging two years, the Malaysian retail industry is gearing up for a much needed recovery in 2022.
Retail Group Malaysia (RGM) in its latest Malaysia Retail Industry Report is projecting a 6% growth rate for the industry next year. “The Malaysian retail industry looks forward to a recovery from the covid-19 pandemic of almost two years. However, few challenges remain.”
The report notes that the number of daily positive cases still remains worrisome. “A potential fourth-wave pandemic is haunting Malaysian retailers. Malaysian non-essential retailers cannot afford another forced closure of physical stores.
“A new Covid variant discovered recently is now spreading rapidly across the world. This will affect the economic recovery around the world as well as in Malaysia.”
RGM points out that the Malaysian government has decided to delay the country’s transition into the endemic phase due to the uncertainties created by the new variant.
“Foreign tourists’ arrival may be affected due to the current virus development. This will affect retail businesses that have been dependent on leisure travellers.
“The recent spike in prices of many consumer goods may continue next year. Rising cost of living will affect the purchasing power of Malaysian households in 2022.”
RGM says it expects the local retail industry to gain momentum in terms of recovery by the end of this year.
“For the fourth quarter of 2021, the estimated growth rate has been revised upwards from 12.7% (estimated in September 2021) to 18.3%.
“Retailers are hopeful that retail sales will climb higher in December this year due to two upcoming major festivals, namely, Christmas and Chinese New Year.”
Fitch Solutions in a recent report, meanwhile, says retail sales in Malaysia have been severely impacted by the Covid-19 pandemic and its resultant restrictions.
“Over 2021, retail sales grew 4.3%, but this is overstated by the low base effect created in 2020, after retail sales contracted by 5.3%.
“This high frequency data suggests that retail sales in Malaysia have still not recovered to pre-Covid-19 levels.”
Comparing retail sales in 2021 to that of 2019, Fitch Solutions says sales remain at 1.2%.
“Malaysian authorities have continued to implement stringent restrictions over 2021, largely in sync with rising Covid-19 cases.
“Higher vaccination rates are needed for these two to be decoupled and allow for a broader recovery in retail sales from 2022 onwards,” it says.
Meanwhile, RGM has revised downwards its retail growth projection for 2021 to 0.5% from 0.8%, initially.
“In September this year, RGM estimated a 0.8% growth rate in retail sales for 2021.