One of the few industries that are truly reflective of the real economy is the retail industry. The reason is that retailing is the industry which will enjoy or suffer the initial wave of any change in the health of consumers’ real wealth.
Today, the Department of Statistics finally made public the performance of the retail industry as well as the distributive trade sector in the fourth quarter of 2008. Despite skepticism expressed far and wide earlier, the retail industry registered an impressive 16.5% year-on-year growth.[1] Distributive trade sector grew by over 10.0% in the same period.[2]
This is surprising given that for the same quarter, the GDP as officially reported by the Department barely grew at 0.1%.
|
Gross Domestic Product / |
2007p
|
Q3 2008p
|
Q4 2008p
|
|
Gross Domestic Product (GDP): |
641,864
|
198,653
|
177,342
|
|
Gross Domestic Product (GDP): |
505,353
|
136,211
|
131,261
|
|
GDP Growth Rate |
6.3
|
4.7
|
0.1
|
|
Gross National Income (GNI): |
628,106
|
192,845
|
n.a
|
|
Per Capita GNI: |
23,115
|
27,674
|
n.a
|
Table reproduced from the Department of Statistics.[3]
This may show how GDP growth as traditionally reported in a single figure is too much of an aggregated figure that masks important trends in the economy.
If accounted for inflation however, the growth in the retail industry as well as in the distributive trade sector might not be all too impressive.
What cannot be ignored is the dramatic dropped between the third and the fourth quarter.
Only one word can describe the quarter-on-quarter comparison: scary. The number for the first quarter of 2009 ought to be scarier. The same trend is observable for the sales of motor vehicles.[4]
Quarter-on-quarter comparison typically is not a good method to compare figures because it ignores seasonal effect. In this particular case however, the drop is far too big. I admit that I am taking an easy way out by refusing to do proper modeling to account for seasonal effect but by eyeballing it, I doubt removing the seasonal effect would successfully fight the endearing gravity.
Yet, it is hard to imagine how those numbers translate into reality in Kuala Lumpur. Marketplaces and shopping malls are still ridiculously filled with eager consumers, as if those numbers were, well, just meaningless numbers. I for instance regularly visit Midvalley Megamall and my experience there offers me nothing but cognitive dissonance.
A friend shared the same feeling with me last week. He asked how has the deteriorating economic environment affected me. Do I know anybody being adversely affected by it? Do I know anybody who lost his or her job?
I have friends in Singapore and New York who are not so lucky. Then again, those places are Singapore and New York, not Kuala Lumpur. Within Malaysia context, I have yet to feel the slightest brunt of the worsening environment and I do not know anybody personally who has lost his or her job. Answering those questions only strengthen my cognitive dissonance.
My personal outlook is outrageous bright compared to bad news which keeps coming everyday. This especially so when the crisis has serendipitously brought me considerable fortune, thanks to the collapse of the Australian dollar. But I am not prepared to test my luck any farther than I have done at the moment.
[1] — The retail trade sub-sector continued to record a growth of 16.5 per cent to attain RM29.3 billion as compared to RM25.2 billion registered a year ago. The sales value for this sub-sector went down by 6.7 per cent as compared to the previous quarter.
[Survey of Distributive Trades Fourth Quarter 2008. Department of Statistics Malaysia. March 3 2009]
[2] — The sales value of the Distributive Trades sector in the 4th quarter 2008 posted a growth of RM85.8 billion or 10.3 per cent as compared with a year earlier. Quarter-on-quarter, the sales value of this sector decreased 10.5 per cent as compared to RM95.9 billion in the 3rd quarter 2008.
[Survey of Distributive Trades Fourth Quarter 2008. Department of Statistics Malaysia. March 3 2009]
[3] — [Gross Domestic Product / Gross National Income. Department of Statistics Malaysia. February 27 2009]
[4] — In this quarter, the sales value in the motor vehicles sub-sector registered a positive growth of 8.2 per cent (RM11.1 billion) as compared to the previous year. Compared to the 3rd quarter 2008, the sales value of this sub-sector registered a decline of 8.0 per cent. [Survey of Distributive Trades Fourth Quarter 2008. Department of Statistics Malaysia. March 3 2009]
One reply on “[1912] Of increased sales in retailing in Q4 2008 and cognitive dissonance”
[…] the retail sector has been the most impressive sector so far. In the fourth quarter of 2008, it grew by over 15% based on year-on-year comparison. […]