KUALA LUMPUR (Dec 7): Retail Group Malaysia (RGM) is projecting a 6% growth in Malaysia’s retail sales for 2022 as the country’s retail industry looks forward to a recovery from the impact of Covid-19 pandemic-driven movement restrictions of almost two years.

In RGM’s retail industry report for November 2021, the group, which interviewed members of the Malaysia Retailers Association (MRA) and Malaysia Retail Chain Association (MRCA) on their retail sales performance for the second half of 2021, however, said few challenges remain for the nation’s retail sector.

“The high [number of] daily positive [Covid-19] cases remains worrisome. A potential fourth-wave pandemic is haunting Malaysian retailers. Non-essential retailers cannot afford another forced closure of physical stores.

“A new Covid-19 variant discovered recently is now spreading rapidly across the world. This will affect economic recoveries around the world as well as in Malaysia.

“[The] Malaysian government has decided to delay the country’s transition into the endemic phase due to uncertainty over the virus pandemic,” RGM said.

The grop said foreign tourist arrivals may be affected due to the current Covid-19 pandemic development and that such sentiment would affect retail businesses that have been dependent on leisure travellers.

Meanwhile, the recent spike in prices of many consumer goods may continue into next year, according to RGM.

“The rising cost of living will affect the purchasing power of Malaysian households in 2022,” the group said.

For 2021, RGM said it had revised its full-year retail industry sales growth forecast for Malaysia from 0.8% in September to 0.5%.

“In September, RGM estimated a 0.8% growth rate for [Malaysia’s] retail sales for 2021. However, this projection needs to revised downwards again [to a 0.5% growth], taking into consideration the worse-than-expected growth during the third quarter (3Q21) as well as a revision of the 4Q21 estimate.

“RGM expects the retail industry to gain momentum in its recovery by the end of this year. For 4Q21, the growth rate estimate has been revised upwards from 12.7% (estimated in September) to 18.3%.

“Retailers are hopeful that retail sales will climb in December due to two upcoming major festivals — Christmas and Chinese New Year,” the group added.

For 3Q21, Malaysia’s retail sales declined 27.8% from a year earlier, while cumulative nine-month retail sales contracted 11.9% compared to the same period a year ago, RGM said.

The 3Q21 decline was below market expectations of a 15.1% contraction, a forecast made in September, according to the group.

“Retailers in Malaysia operated with strict social distancing measures under the recovery movement control order during the same quarter a year ago (3Q20).

“On the other hand, most retailers were forced to shut down during the first-half period of 3Q21,” RGM said.