Senior Economist at UOB Group Alvin Liew reviews the latest Retail Sales results in Singapore.

Key Takeaways

“Singapore’s retail sales rose more than expected, by 2.2% m/m, 4.5%  y/y in Mar, versus the Bloomberg median estimate for a -1.1% y/y contraction. Nonetheless, it was a marked easing from Feb’s 4.1% m/m, 12.6% y/y increase (which was the highest y/y print since Aug 2022). Excluding motor vehicle sales, the sequential increase was even stronger at 2.4% m/m, and it translated to 4.1% y/y increase in Mar (from 2.2% m/m, 11.6% y/y in Feb).  Despite the less robust headline growth in Mar (compared to Feb), retail sales value was higher at S$4.1bn in Mar, from S$3.6bn in Feb.”

“Factors supporting retail sales growth continued to be domestic demand and improving tourism numbers. As we highlighted previously, Singapore Tourism board reported 2.9 million inbound tourists in 1Q23 (62% of the 4.7 million recorded in 1Q 2019) but importantly, they had also stayed longer (3.97 days versus 3.34 days in 2019).”

“Outlook – We continue to expect domestic retailers to enjoy domestic and external supports, complemented by the return of major events such as various sports, concerts and BTMICE (Business Travel and Meetings, Incentive Travel, Conventions and Exhibitions) activities attracting tourist arrivals, while strong employment and wage growth conditions in Singapore will likely contribute further to domestic consumption demand. Downside risks to retail sales in 2023 include a more cautionary external environment (with rising risk of growth slowdown and banking sector uncertainty) and still-elevated inflation pressures that may increasingly curb discretionary spending of households. The low base effect is also likely to fade, rendering less uplift especially in 2H 2023.”