Growth of 6.3% predicted for consumer spending projects: Fitch

Household spending has been estimated to have contracted by 13.8% over 2020.

Consumer spending was forecasted to rise by 6.3% YoY on the back of positive retail sales growth, according to a forecast by Fitch Solutions.

“The outlook for the Singaporean consumer spending over 2021 is one of recovery. We forecast household spending to post a real growth of 6.3% YoY. This marks the start of a recovery from the -13.8% YoY contraction in household spending estimated over 2020,” Fitch said.

In February, Singapore’s retail sales grew by 3.5% YoY, recording the first positive YoY growth since October 2018. Fitch said this was an indication that consumer recovery was underway.

“While household spending will begin its recovery trajectory in 2021, total household spending is projected at $165b (US$124b) in 2021, lagging behind the pre-Covid-19 levels of $179.7b (US$131.7b) in 2019,” the report said.

Fitch reiterated that although consumer spending is recovering, it still rests on Singapore’s vaccination drive.

“Our global view for a notable recovery in consumer spending relies on the ability of authorities to vaccinate a large enough proportion of their populations and thereby experience a notable drop in Covid-19 infections. Both these factors will lead to government's gradually lifting restrictions, which will boost consumer confidence and retail sales,” Fitch said.