[MALAYSIA] MIDF Amanah Investment Bank Bhd’s research division, MIDF Research, forecasts continued growth in domestic spending, following a strong performance in retail sales recorded in March. The research firm stated in a recent report that this optimistic outlook is driven by several factors, including a robust labor market with steady employment and wage growth, particularly within domestic-oriented sectors, which is expected to support ongoing household expenditure.
The research house further noted that manageable inflation, coupled with an accommodative monetary policy stance and targeted fiscal initiatives, will bolster consumer purchasing power and overall confidence in spending. "Strong domestic demand will likely remain a crucial driver of Malaysia’s economic growth, helping to mitigate the impact of external challenges, such as slowing global trade and heightened geopolitical risks," it added.
In addition, MIDF Research highlighted the growing role of the tourism sector in fueling economic expansion, as rising tourist arrivals and increased spending are positively influencing the services and retail industries. The report pointed out that Malaysia has seen a marked increase in visitors from major markets such as China, India, and Southeast Asia, contributing to the growth of the hospitality and retail sectors. This influx is also generating broader economic benefits, supporting local businesses and employment. Furthermore, the government’s focus on promoting eco-tourism and cultural heritage sites is expected to attract a wider range of visitors, diversifying tourism revenue streams.
Despite this optimistic outlook, MIDF Research also raised concerns over potential risks. Escalating global trade tensions could dampen both consumer and business sentiment, leading to more cautious spending behaviors. While temporary tariff reductions between the United States and China have offered some relief, uncertainty remains regarding the future of trade negotiations, including their scope, timeline, and long-term sustainability. Similarly, the results of Malaysia’s ongoing trade talks with the U.S. under President Donald Trump’s administration remain uncertain.
The report emphasized that these trade discussions are not only affecting consumer sentiment but also influencing business investment decisions. Many companies are adopting a wait-and-see strategy, which could delay expansion efforts and hiring, potentially slowing economic growth in the near term. MIDF Research stressed the need for clear and stable trade policies to restore confidence and encourage investment.
Although the 90-day tariff pause may provide temporary relief, the ongoing uncertainty continues to pose a risk to the resilience of retail sales and the broader economic outlook.
Moreover, MIDF Research pointed out that recent policy changes, such as increases in diesel prices and utility tariffs, have had a limited impact on overall price levels. The report also acknowledged that the government's ongoing efforts to streamline regulatory processes and enhance the ease of doing business are expected to alleviate some inflationary pressures. The rise of digital payment systems and e-commerce platforms is helping businesses and consumers manage costs more effectively, contributing to price stability and ensuring the broader benefits of economic growth are widely shared.
The report further underscored the significance of technology and innovation in driving Malaysia's economic development. The increasing integration of digital technologies by local businesses is improving productivity and competitiveness, thereby supporting higher wage growth and greater consumer spending. MIDF Research called on policymakers to continue investing in digital infrastructure and education to maintain Malaysia’s position at the forefront of technological progress.
Lastly, the research body reiterated that recent policy adjustments, such as the higher diesel prices and increased utility tariffs, have had only a limited impact on overall inflation levels.
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