, Singapore
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Experts unveil 3 factors that will drive up retail sales in 2H23

Economists expect the market’s sales momentum to improve in the remaining months.

Despite an expected slowdown in tourism momentum in 3Q23, experts still believe that the retail market’s sales will improve in the latter half of the year.

RHB Senior Economist Barnabas Gan said three factors will help improve the sales momentum of the market, including the retail events scheduled in 2H23.

“We note that several seasonal factors such as the F1 race (September), Black Friday and Single’s Day (November) and festivals (typically in December) will especially lead retail sales higher,” Gan said.

“These factors have historically boosted retail sales, except during COVID-19, in Singapore’s brick & molar stores, as well as on online platforms. They could continue to attract foreign inbound visitors into Singapore in 2H23,” Gan added.

UOB’s Senior Economist, Alvin Liew, had a similar sentiment, saying retailers will continue to enjoy domestic and external support, “complemented by major events such as various sports, high profile concerts and Business Travel and Meetings, Incentive Travel, Conventions and Exhibition activities.”

The expected improvement in Singapore’s GDP momentum in 2H23 will also support private consumption and retail sales in the same period, according to Gan.

“Singapore’s high-frequency data, including trade and manufacturing activities, are gradually improving year-to-date. This suggests that the real economy is, overall, in better standing when compared to 1H23,” Gan said.

The impending GST hike in 2024 will also drive some front-loading of consumer demand, especially during the end of the year.

“We saw a similar phenomenon as of late 2022, as consumers front-loaded their purchases in 4Q22 in expectation of a GST rate hike to 8.0%, effective 1 January 2023,” Gan said.

Liew, however, warned that a more cautionary external environment and still-elevated inflation pressures, especially on food and transport, will likely affect retail sales. 

The slower-than-expected return of inbound Chinese tourists will also remain a concern.

Gan shared a similar sentiment, saying that “China’s outbound tourism demand into ASEAN-6 will stay lacklustre.”

Given these factors, RHB expects a retail sales growth of 2.0% for 2023, whilst UOB forecast a 5.0% full-year growth.


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