Retail outlook clouded by uncertainties in 2025

Growth may decelerate in the second half due to rising trade tensions.

Uncertainty in the global business environment may slow down Singapore's retail sales in the second half of 2025, after a strong start this year, further affecting the city-state's economy.

“Growth in both the US and China is expected to slow, which could dampen export receipts. Given these dynamics, households may reduce their discretionary spending,” said RHB Associate Research Analyst Laalitha Raveenthar.

As economic growth slows across Asia and in Singapore, retail demand will likely weaken. This slowdown in gross domestic product momentum could discourage spending by both local residents and tourists.

RHB expects Singapore’s full-year GDP to slow to 2.8% this year, with a downside bias tilted towards 2.5% amidst heightened uncertainties on the external front.

In its recent macro note, UOB also pointed out that the recent increase in tariffs and trade tensions could negatively impact both local and tourist spending, particularly if labor market conditions in the region significantly weaken.

The opening of new attractions in a local theme park in February 2025 and Singapore’s fifth zoological park in March 2025 could help to bolster domestic tourism, which is a positive development for retail sales, UOB added.

In February 2025, Singapore retail sales fell 3.6% year-on-year, with most sectors declining. Apparel and footwear dropped 18.4%, department stores 14.6%, and supermarkets and hypermarkets 13.3%, to name a few.

RHB said this was partly due to Chinese New Year timing, which was celebrated in January this year as opposed to February last year.

For the first half of the year, RHB expects Singapore’s retail sales to stay supported, expanding by 2.0% in 2025, slightly higher than 1.4% growth in 2024.

“Retail sales growth is expected to be resilient at least into H1 2025 this year supported by: (1) resilient domestic labour market, (2) government support measures and (3) upcoming retail events that could boost tourism activity,” it added.

UOB also said that compared to the six Taylor Swift concerts in March last year, “the historical data suggests that the potential boost to overall retail sales from the upcoming Lady Gaga concerts in May (four shows) is likely to be limited given the lower number of shows although hotel revenue per available room could be supported given Singapore will be her only stop in Asia.”