Retail sector faces headwinds despite expected early 2025 boost

Expected GDP easing to affect retail sales growth this year.

Economists predict retail sales growth in early 2025 but note uncertainties clouding the outlook for the rest of the year.

RHB economists project Singapore’s GDP growth to ease to 3.0% in 2025 as slower economic growth in key trade partners such as the US and China weighs on export revenues.

The slowdown in GDP will likely reduce discretionary spending of households, said the experts.

"Retail demand may likely slow in tandem with easing GDP growth momentum across Asia and Singapore, which may dissuade domestic and tourism-related expenditure," RHB economists said.

RHBV added that the Ministry of Trade and Industry is also cautious about the outlook for tourism-related and consumer-facing sectors, such as the retail trade and food & beverage services sectors, due to the increased local outbound travel.

Still, RHB predicts an uptick in retail sales in Q1 2025, citing factors such as festive periods, robust labour conditions, and the second phase of CDC voucher distribution.

UOB economists, however, believe the $300 CDC voucher impact may be less pronounced due to previous distributions.

They expect additional CDC vouchers to be announced in the 2025 Budget, benefiting households and small businesses.