Chart of the Day: Private consumption to see modest uptick in 2017

On the back of real wage growth.

Consumer spending in Singapore will experience a modest increase over 2017, as forecast by BMI Research.

The research house said this will be  on the back of real wage growth, which will be supported by a tight labour market. However, weak external demand and lacklustre economic growth will provide headwinds for consumer spending over 2017. Consumer sentiment will remain weak throughout 2017, dampening retail sales growth.

"We hold an optimistic outlook for 2017 with real private consumption growth forecast to increase modestly from 3.7% in 2016 to 4% in 2017. This acceleration in consumption will be largely driven by real wage growth on the back of a tight labour market," BMI said.

It added, "Despite this acceleration in consumption growth, we expect weakness in the domestic economy, declining job security and accelerating consumer prices to soften consumer sentiment over 2016 and 2017, underpinned by weak consumer confidence readings over the first half of 2016 at 33.6- the lowest reading since 2009."