Consumer sector
After expanding by an estimated 6.5% in 2011, the Retail Group Malaysia (RGM) on behalf of Malaysian Retailers Association (MRA) has projected retail sales growth to moderate to 6% this year, the slowest since the 8.4% jump in 2010.
These MRA-initiated retail sales growth projections seem consistent with BIMB Securities’ forecasts for private consumption growth of 6.4% in 2011 and 6% in 2012.
According to MRA, these forecasts for retail sales, which exclude bulk or big-ticket items such as vehicles and houses, underline concerns over rising inflation, as measured by headline consumer price index (CPI), which was slow to ease in the 2H2011 after peaking at 3.5% year-on-year (y-o-y) in June 2011.
In its latest Malaysia Retail Industry report, the RGM blames the widely expected slump in external demand as a result of a European recession-led global slowdown which will negatively affect many Malaysian export-oriented manufacturing industries as the main culprit of the not-so-rosy retail outlook in 2012.
In view of the many downside risks to the global economic prospects, in particular the potential deepening of the eurozone sovereign debt crisis, the very anaemic US growth, China’s “soft landing” and waning recovery momentum in Japan post-Fukushima tragedy, Malaysian consumers may turn cautious in their spending intentions which could translate into lower real retail spending.
With the apparent downtrend in headline CPI, which we forecast to drop below the 3% y-o-y threshold by early this year after levelling off to 3.3% y-o-y in November 2011, concerns about the economic outlook — employment prospects, both job availability for job seekers and security for the already employed as well as sources of personal income, in particular regarding increments and bonuses — should soon overtake worries about runaway inflation.
Increasing concerns over economic health, job outlook and personal finances could dent confidence of consumers, who may choose to tighten their purse-strings, change their spending patterns by cutting back on spending on expensive luxury items or down-trading/bargain-hunting in favour of low-cost or competitively priced items or even postpone purchasing plans altogether.
Nonetheless, given the increase in Mier’s consumer sentiment index (CSI) in the 3Q2011 to 108.7 from 107.9 in the preceding quarter, it appears that recessionary mindset has yet to develop among Malaysian consumers. A list of disposable income enhancement measures announced in Budget 2012 should help put additional money into consumers’ pockets.
Still, the readiness to spend among Malaysian consumers may be timed mostly with huge discounts and marked-down prices during sales or promotional periods.
Although the consumer morale has remained relatively high, retail sales growth is estimated to have slowed to 7% y-o-y in 3Q2011 (versus 2Q2011: +9.1% y-o-y and 3Q2010: +9.8% y-o-y) and projected to trek down further to 5% y-o-y in the 4Q2011 notwithstanding spending related to school holidays, year-end festivities and back-to-school requirements. — BIMB Securities Research, Jan 4
After expanding by an estimated 6.5% in 2011, the Retail Group Malaysia (RGM) on behalf of Malaysian Retailers Association (MRA) has projected retail sales growth to moderate to 6% this year, the slowest since the 8.4% jump in 2010.
These MRA-initiated retail sales growth projections seem consistent with BIMB Securities’ forecasts for private consumption growth of 6.4% in 2011 and 6% in 2012.
According to MRA, these forecasts for retail sales, which exclude bulk or big-ticket items such as vehicles and houses, underline concerns over rising inflation, as measured by headline consumer price index (CPI), which was slow to ease in the 2H2011 after peaking at 3.5% year-on-year (y-o-y) in June 2011.
In its latest Malaysia Retail Industry report, the RGM blames the widely expected slump in external demand as a result of a European recession-led global slowdown which will negatively affect many Malaysian export-oriented manufacturing industries as the main culprit of the not-so-rosy retail outlook in 2012.
In view of the many downside risks to the global economic prospects, in particular the potential deepening of the eurozone sovereign debt crisis, the very anaemic US growth, China’s “soft landing” and waning recovery momentum in Japan post-Fukushima tragedy, Malaysian consumers may turn cautious in their spending intentions which could translate into lower real retail spending.
With the apparent downtrend in headline CPI, which we forecast to drop below the 3% y-o-y threshold by early this year after levelling off to 3.3% y-o-y in November 2011, concerns about the economic outlook — employment prospects, both job availability for job seekers and security for the already employed as well as sources of personal income, in particular regarding increments and bonuses — should soon overtake worries about runaway inflation.
Increasing concerns over economic health, job outlook and personal finances could dent confidence of consumers, who may choose to tighten their purse-strings, change their spending patterns by cutting back on spending on expensive luxury items or down-trading/bargain-hunting in favour of low-cost or competitively priced items or even postpone purchasing plans altogether.
Nonetheless, given the increase in Mier’s consumer sentiment index (CSI) in the 3Q2011 to 108.7 from 107.9 in the preceding quarter, it appears that recessionary mindset has yet to develop among Malaysian consumers. A list of disposable income enhancement measures announced in Budget 2012 should help put additional money into consumers’ pockets.
Still, the readiness to spend among Malaysian consumers may be timed mostly with huge discounts and marked-down prices during sales or promotional periods.
Although the consumer morale has remained relatively high, retail sales growth is estimated to have slowed to 7% y-o-y in 3Q2011 (versus 2Q2011: +9.1% y-o-y and 3Q2010: +9.8% y-o-y) and projected to trek down further to 5% y-o-y in the 4Q2011 notwithstanding spending related to school holidays, year-end festivities and back-to-school requirements. — BIMB Securities Research, Jan 4
