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The retail sector in Singapore is forecasted to recover further in the next months, suggested Economist Barnabas Gan at UOB Group.

Key Quotes

“Singapore retail sales fell 8.5% y/y in July 2020, a smaller decline compared to June’s -27.8% y/y. Excluding motor vehicle sales, retail sales fell by a smaller margin of 7.7% y/y. Similar to June, retail sales surged 27.4% m/m sa, suggesting that retail demand has been gradually improving post Circuit Breaker (7 April – 1 June).”

“Sustained demand for groceries and digital solutions due to the work-from-home arrangements lifted sales in Supermarkets & Hypermarkets, Computer & Telecommunications Equipment, and Mini-marts & Convenience Stores.”

“Still, COVID-19 and its negative impact continued to be felt by various segments of retail sales. Sales in Singapore’s departmental stores continued to contract for its 11th straight month, coupled with double-digit y/y contractions in the sales of food & beverages, wearing apparels & footwear, watches & jewellery, optical goods & books and motor vehicles.”

“Online sales as a share of total retail sales, likely a proxy of the extent of e-shopping as compared to what is observed at the brick-and-mortars, has fallen to its lowest in four months at 11.0%. Nonetheless, online sales in real terms have grown 79.8% y/y in July 2020, an elevated level compared to 2019’s average of 12.8%.”

We maintain our view for Singapore’s retail sector to recover, albeit slowly given the absence of international tourism demand. The return of consumer demand should also cushion the rate of contraction on a year-on-year perspective, although full-year retail sales will likely fall by 15.0% in 2020.”

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