Singapore retail outlook dims as demand momentum fades: analysts

Both banks highlight that underlying retail activity remains weak.

Singapore’s retail sector is heading for a soft patch in the second half of the year, as both RHB and UOB flag mounting economic pressures and a lack of sustained consumer demand.

According to RHB’s latest economic outlook, the retail sales outlook is “cautious” due to an expected local and regional economic slowdown, a cooling labour market, and a challenging tourism recovery.

Similarly, UOB’s macro note describes the retail climate as “tepid,” emphasizing that recent gains were driven more by short-term boosts than lasting demand.

In May, Singapore’s retail sales rose 1.4% YoY, with motor vehicles rebounding by 10.4% and helping lift overall figures.

Events such as Lady Gaga’s concert and CDC voucher disbursements provided an additional lift, along with stronger sales in supermarkets (+7.2%) and F&B services (+1.4%).

However, both banks highlight that underlying retail activity remains weak. UOB noted that without the boost from motor vehicles, retail sales would have fallen by 0.6% MoM.

RHB also pointed out that excluding motor vehicles, May’s year-on-year retail growth was flat, down from 0.8% in April.

Looking ahead, global trade tensions, a potential resumption of tariffs, and general macroeconomic uncertainty are likely to hit business confidence and household consumption. Both banks see Singaporean consumers adopting a more cautious, wait-and-see approach.

The labour market is also flashing warning signs. Surveys by the Ministry of Manpower in April and May showed a decline in firms intending to raise wages (21.2%, down from 21.7% in March). Job vacancies have risen, but UOB sees softening wage prospects and employment sentiment, especially in trade-related industries.

Tourism has not yet fully bounced back. According to RHB, tourist arrivals as of May were up only 2.3% YtD, and UOB noted they remain at just 91% of 2019 levels.

A strong Singapore dollar, which has appreciated 7.2% YtD against the USD, is also deterring inbound tourism and encouraging locals to spend overseas, undercutting domestic retail.

Both banks acknowledge that government vouchers—such as CDC disbursements in May and SG60 payouts in July—may provide short-term support, but will likely not shift the broader downtrend in retail consumption.

With economic indicators pointing toward softening conditions and retail sales already showing signs of losing momentum, both RHB and UOB signal that Singapore’s retail sector may struggle to maintain growth in the second half of 2025.