KUALA LUMPUR: Retail Group Malaysia (RGM) forecasts  a 4.5% growth in retail sales to RM108.30bil in 2019, despite a lacklustre start in January-February, due to the Hari Raya Aidilfitri festivities and an increase in economic activities in the later part of the year.

In its retail industry report issued on Tuesday, RGM said in the first two months of this year, retail sales were lacklustre despite the Chinese New Year celebration. 

For the first quarter, it expects the retail industry to recover and expand by 3.1%, with pharmacy and personal care expanding the fastest by 12.7%, followed by department stores at 7.6%. 

Elaborating on the Q1 outlook, RGM said the department store cum supermarket operators are expecting their businesses to maintain a 4.4% growth rate. Fashion and fashion accessories segment see a weak 0.1% growth while other specialty stores are expecting a 5.8% growth.

However, supermarkets and hypermarkets do not expect their businesses to return to the black in Q1 and they expect to see a decline of 7.6%, according to RGM.

In Q2, RGM said the overall retail industry is expected to recover  and grow at an estimated 4.8%, underpinned by the Hari Raya festival taking place during this period.

During the third quarter of this year, retail sales are expected to expand by 3.9%. More activities during the second half of this year should boost retail sales during the final quarter of this year. During the year-end period, retail sales should rise by 5.8%,” it said.

Commenting on the 2018 retail industry, RGM said retails sales grew 3.9% due to a slowdown in the fourth quarter. In Q1, retail sales grew by 2.6%; Q2 2.1% and Q3 6.7% and Q4 2.7%.

“Year-end festival and school holiday did not contribute to the better growth rate during this quarter,” it said.

RGB said the latest quarterly result was consistent with the Cosumer Sentiment Index during the same period published by MIER. The rising cost of living and stagnant take-home pay continue to deteriorate the purchasing power of Malaysian consumers.

“For the whoile of 2018, the retail sale growth was 3.9% (or RM103.70bil) as compared to the same period a year ago. Despite the three-month tax holiday, it failed to lift the sluggish retail industry.

“For the sixth consecutive year, the retail industry performance lagged behind the GDP growth rate,” it said.