Kuala Lumpur: MIDF Amanah Investment Bank Bhd’s research arm, MIDF Research, is forecasting sustained growth in domestic spending, following an increase in retail sales recorded in March 2025.

According to BERNAMA News Agency, the investment bank highlighted several key factors driving this outlook, including a stable labour market with consistent employment and wage growth, especially in sectors focused on domestic operations, which are expected to support household spending levels. Manageable inflation, coupled with an accommodative monetary policy and targeted fiscal measures, is anticipated to bolster consumer purchasing power and spending confidence.

The research arm emphasized that robust domestic demand is likely to remain a fundamental component of Malaysia’s economic growth, mitigating the adverse effects of external challenges such as declining global trade and heightened geopolitical risks. Additionally, the tourism sector is expected to play an increasingly significant role in driving growth, with more tourists arriving and spending, positively impacting the services and retail sectors.

Nonetheless, MIDF Research expressed caution regarding potential downside risks. Rising global trade tensions could negatively affect consumer and business sentiment, potentially leading to more cautious spending. Although the United States and China have temporarily eased tariffs, uncertainty persists about reaching a mutually acceptable agreement, including its scope, timeline, and sustainability.

Moreover, the outcome of Malaysia’s ongoing trade negotiations with the US administration remains uncertain. While the 90-day tariff pause may provide temporary relief, underlying uncertainty continues to threaten the resilience of retail sales and the broader economic outlook.

MIDF Research also pointed out that recent policy changes, such as increased diesel prices and utility tariffs, have had a limited impact on overall price levels. The government’s decision to postpone expanding the sales and service tax, aimed at supporting manufacturers and exporters amid challenging conditions due to higher US tariffs, is expected to help maintain manageable price pressures.

However, the research arm noted that if tariff shocks significantly threaten Malaysia’s outlook, further subsidy rationalisation and planned increases in tax and utility rates might be reconsidered and deferred to support domestic consumption and overall growth.