Malaysia: Malaysia's distributive trade growth is expected to reach 6.1 percent in 2026, up from 5.6 percent in 2025, driven by stronger-than-expected performance this year. Contributing factors include wholesale stockpiling, increased petroleum-related prices, and a recovery in motor vehicle sales.

According to BERNAMA News Agency, Kenanga Investment Bank Bhd (Kenanga IB) reported that year-to-date distributive trade growth had risen to 9.4 percent from 7.5 percent in the January-March period. The bank attributed this to front-loaded demand amid rising cost pressures and supply uncertainties. However, it noted that softer retail performance might indicate that underlying consumer momentum is beginning to stabilize following earlier festive-driven strength.

Kenanga IB highlighted that elevated energy prices, ongoing geopolitical tensions, and prolonged supply chain disruptions could impact consumption and business activity in the second half of 2026. The bank cautioned that the current strength in trade growth might be temporary and unsustainable in the coming months.

Furthermore, Kenanga IB has maintained its 2026 gross domestic product (GDP) growth forecast for Malaysia at 4.5 percent, compared with 5.2 percent growth in 2025. This reflects a cautiously optimistic outlook for the economy. Monthly indicators, such as improved distributive trade performance and better-than-expected industrial production growth in April, suggest that domestic economic activity remains resilient in the second quarter of 2026.

The rebound in motor vehicle sales and wholesale activity indicates potential support for near-term growth, especially within services-related sectors. Kenanga IB maintains that growth momentum will likely strengthen in the second quarter before slowing in the second half if geopolitical tensions persist and continue to disrupt supply chains.