The term distributive trade refers to wholesale trade and retail trade.

The research house said this is supported by a projected decline in the unemployment rate to an average of 3.2% this year from 3.4% in 2023, alongside a rise in tourist arrivals and spending.

“We remain cautious in our outlook due to the uncertainty in the mechanism of subsidy rationalisation, which could potentially weigh on consumer spending and subsequently affect overall sales growth,” it said in a note.

It said Malaysia’s distributive sales increased to a three-month high in February 2024 at 5.5% year-on-year (y-o-y) on higher sales of retail trade, which partially mitigated the sharp slowdown in motor vehicle sales.

“Month-on-month growth contracted to 0.9% from 1.1% in January for the second straight month, albeit at a smaller rate, while sales value fell slightly to RM141.1 billion from RM142.4 billion in January 2024,” it noted.

Kenanga IB also maintained its 2024 gross domestic product (GDP) growth forecast of 4.5%-5% from last year’s 3.7% growth following a rebound in the manufacturing sector, particularly the export-oriented sub-sector.

“We continue to project an expansion in the first quarter 2024 GDP growth at 3.3% (Q4 2023: 3%) given the sustained domestic demand, backed by recovery in the manufacturing sector,” it added.