KUALA LUMPUR: Independent retail research firm Retail Group Malaysia (RGM) has revised downward its retail sale growth forecast for 2019 to 4.4%, from 4.9% estimated in June 2019, after retail sales for the second quarter came below market expectation.

This is the second revision in the annual retail sale growth rate.

“Malaysia’s retail industry performance continues to be affected by both internal and external market environment. Within the country, slow economic momentum and limited policies to stimulate consumers’ spending hamper the growth of retail stores. Trade disputes among major economies led to slower export growth, declining stock market performance and weakening local currency. All these resulted in low consumers’ confidence level, uncertain future job prospects and unwillingness to spend more,” RGM said in a report today.

The Malaysian retail industry saw a 4.5% jump in retail sales in the second quarter of 2019 as compared to the same period in 2018.

“This latest quarterly result did not meet market expectation. Members of Malaysia Retailers Association projected the second quarter growth rate in June 2019 at 5.5%. This latest result was 18% below market expectation,“ RGM added.

A year ago, retail sale growth rate was only 2.1%. During the month of June 2018, the Goods & Services Tax (GST) was reduced from 6.0% to 0%. Hari Raya was also celebrated during the same month a year ago. However, Malaysian consumers did not go all out to spend on all kinds of retail goods mainly because they did not have extra income to do so.

Hari Raya, the largest festival in Malaysia, was celebrated earlier this year as compared to 2018. As a result, spending by Malaysians on this festival started earlier. This had boosted retail spending to a certain extent.

RGM said uncertain economic prospects due mainly to external factors had discouraged Malaysian consumers to buy more.

For the first six months of this year, retail sale grew 4.2% as compared to the same period a year ago.

However, members of the retailers’ association maintain their positive outlook on their businesses in the next three months, estimating an average growth of 3.2% during the third quarter of 2019.

For the last quarter of this year, the estimated retail growth rate is maintained at 5.8%. Year-end school holiday, Christmas and aggressive promotions by retailers are expected to move sale of consumer goods during this period.

Potential interest rate cut before end of this year may also boost retail spending, said RGM.