Retail growth softens as headwinds mount in second half

Retail sales in April eked out a 0.3% YoY gain, recovering slightly from March's decline of 2.7% on a seasonally adjusted basis.

Singapore’s retail sector posted modest growth in April 2025, but economists are warning that underlying headwinds could weigh on consumer spending in the second half of the year.

According to UOB, retail sales in April eked out a 0.3% YoY gain, recovering slightly from March's decline of 2.7% on a seasonally adjusted basis. RHB similarly reported a 0.3% increase in retail sales from a year ago, with sales excluding motor vehicles rising 0.8% YoY.

Performance across retail segments was mixed. Robust growth was seen in sales of computers and telecommunications equipment, which surged 14.8% YoY. Watches and jewellery also continued to perform well, registering a 12.9% increase.

Meanwhile, recreational goods, mini-marts, food and alcohol, and optical goods saw year-on-year improvements after earlier weakness.

However, several key categories remained under pressure. Furniture and household equipment sales fell 5.6% YoY, whilst department store sales dropped 8.2%. Sales at petrol service stations plunged 10.6%. Sales of wearing apparel and footwear declined by 10.3%.

UOB’s economists attributed the subdued overall growth to “the challenging recovery in tourist arrivals,” noting that visitor numbers from Southeast Asia, particularly Thailand and the Philippines, have been sluggish so far this year as travellers turn to destinations like South Korea and Japan.

UOB also highlighted the impact of a relatively strong Singapore dollar, which has encouraged some residents to spend abroad instead.

RHB economists described April's softer retail figures as partly reflecting “a natural pullback in consumer spending following the strong demand seen in 1Q25, which was driven by festive-related activities.”

They also pointed to strong online sales momentum as a sign of continued consumer confidence, with online transactions now accounting for nearly 50% of sales in computers and telecommunications equipment.

Looking ahead, both research houses see some near-term support from government measures and major international events.

RHB noted that the distribution of Singapore’s Community Development Council (CDC) vouchers, worth $500 in May, and the upcoming SG60 vouchers of up to $600 in July will help sustain spending in the second quarter.

Despite this, both UOB and RHB expressed caution about the second half of 2025. RHB warned that “global uncertainties could prompt a sharper-than-anticipated slowdown in economic activity,” particularly if US-China trade tensions escalate once more.