Retail sales still growing BUT forecast is lowered, again.

Forecast for retail sales growth rate has been lowered further for the second time. Instead of a predicted 4.9 percent growth earlier, The Malaysia Retailers Association (MRA) has lowered the projected retail sales growth rate in 2015 to 4.0 percent. Major reasons cited include higher costs of living, a weak Ringgit and higher cost of doing business. This has caused the consumers to hold back their spending. The MRA said that Q1 of 2015 was positive as sales grew 4.6 percent but Q2 showed a negative -3 percent. Q3 is expected to be 4.8% followed by 6.9% in the final quarter.
After reading through all these numbers, I seriously hope everyone noted that except for Q2 2015 which was negative because everyone bought everything in the Q1, other quarters are expected to be positive and the full year is also forecasted to be positive, at 4.0 percent growth. What this tells us is a story which has been repeated many times for countries which implemented GST. Read here: jj   Due to uncertainty, the spending would be down and after some getting used to, the spending pattern would return.
Think rationally, what would cause the overall spending to be down, is it really the GST? Or is it the amount of money we have in our pockets? Looking at the Gen-Ys of today, I am not confident at all that the materialism thinking of today would stop simply because of GST. Another Gen-Y friend had just bought an Iphone 6 just last week. This is despite the fact that she kept telling me that her budget was only RM1,500. Thus, she signed up with DIGI which tied her to a contract and she managed to buy the phone below her targeted budget.
As for money we have in our pockets, look at the unemployment rate instead. It will give us a better number. When news of retrenchment starts to increase, this would cause the retail sales to go down. As of now, I do not see such signs yet. Also these days any big company shutting down is immediately reported by both offline and online medias, thus it is quite easy to know when the bad times are coming. My advice is, spend wisely and only on necessity. This should be the case whether or not the economy is good or bad. Every season has its time. Tough times never last forever. Thus, it is important to objectively see the real signs and act accordingly. Thinking of first home? Yes, please proceed because even if you do not buy, you are still paying rental anyway. Happy buying.
written on 3 July 2015
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