Tourist arrivals and favorable retail trends expected to support continued growth
Singapore’s retail sales continued their growth trajectory, rising 1.1% year-on-year in July, marking the sixth consecutive month of increases. The growth came in slightly above the revised 1% increase recorded in June, according to data from the Department of Statistics (Singstat). The monthly sales value reached S$3.9 billion, with online sales accounting for 12.6% of the total.
While this growth was slightly below the median 2.1% increase expected by economists, the tourism sector is seen as a key factor in sustaining retail demand in the coming months. Economists noted that the growth was partially driven by a surge in tourist arrivals, which reached 1.4 million in July, the highest number for the year. Tourism improvements, especially from Chinese visitors, are expected to continue to play a significant role in boosting retail sales.
Excluding motor vehicles, retail sales still showed expansion, growing 0.4% from the previous year, marking the 17th consecutive month of growth. However, on a seasonally adjusted basis, retail sales excluding motor vehicles declined by 1.1% month-on-month.
The food and beverage services sector also saw robust growth, with a 6.5% year-on-year increase, though slightly lower than the 7.2% rise in June. All categories in the sector recorded positive growth, particularly food caterers, which saw a 24% increase. The retail and foodservice growth reflects favorable labor market conditions, with low unemployment supporting domestic consumption.
Looking ahead, economists remain optimistic that tourism and other factors such as large events like the Formula 1 Grand Prix will further boost demand. However, concerns about China’s economic situation could pose risks to discretionary spending, particularly as wage growth cools in a more uncertain economic environment. Despite this, retail sales growth for the year is expected to reach 3.5%, lower than the previously projected 5% increase.
