KUALA LUMPUR: MIDF Research expects the upbeat domestic demand momentum underpinned by a steady labour market, softening inflationary pressure, pick-up in tourism activities, and supportive economic policies to boost first quarter (Q1) of 2023’s gross domestic product (GDP) growth and the overall 2023 expansion rate.
In a note today, the research house said it is optimistic that retail trade growth could touch 8.9% for 2023, considering the macroeconomic outlook and improving domestic fundamentals.
“We believe the pent-up demand will continue into this year underpinned by improving labour market, stable inflationary pressure, accommodative economic policies and an uptick in the tourism industry.
“Even though the overnight policy rate (OPR) is back to its normalised rate of 3.00%, we believe it would have minimal effect on domestic spending outlook, and we are confident that Bank Negara Malaysia will keep the OPR status quo at least until this year,” it said.
On tourism, MIDF Research said the third month of this year saw international passenger movements registered at three million, reaching 66.2% of the February 2019 level and the highest since February 2020.
“March 2023 saw a strong pick-up of passenger movements, thanks to long school holidays.
“During the pre-pandemic, 50.7% of Malaysia’s airports’ passenger traffic was contributed by international travellers, 25.0% by Asean and 25.7% by non-Asean destinations,” it said.
The research house said it expects airport passenger movements to improve in 2023, underpinned by borders reopening by China and Japan.
“The recovery towards the 2019 level is still a long journey despite the reopening of Malaysia’s international borders since last year, and our view is that the earliest for passenger traffic to reach the 2019 level will only be by 2024,” it said.
MIDF Research said the pick-up in tourism activities will be led by China’s tourists, the recovery of the labour market, and softening inflation rate.
“Supportive economic policies will bolster household consumption and retail trade spending to stay upward for this year,” it said.
MIDF Research said that on Malaysia’s wholesale and retail trade for March 2023, consumer demand would remain robust as retail trade growth remained double-digit for the past 14 months despite inflation concerns and recorded sturdy performances.
According to the Department of Statistics Malaysia, wholesale and retail trade sales grew 11.9% year-on-year to RM138.5 billion, attributed to the retail trade sub-sector, which saw a 17.7%, or RM8.8 billion, increase in sales to RM58.7 billion for March 2023. – Bernama