SINGAPORE (July 15): Consumer spending levels in Singapore for 2020, like the rest of the world, have been adversely affected by the onset of Covid-19 lockdown measures. Yet with Phase 2 of “Circuit Breaker” measures well into its first month of implementation, research house Fitch Solutions predicts a recovery in consumption spending in 2021.
According to Fitch, the impact of Covid-19 and the subsequent introduction of Circuit Breaker measures will see real household spending growing by just 1.2% y-o-y this year. This is a significant loss compared to the 3% y-o-y real growth seen last year. Still, despite Fitch’s country risk analysts estimating a 2.8% y-o-y economic contraction for the republic, household spending levels are not expected to enter the red this year despite pressure from higher unemployment, which the analysts expect to rise to 2.5% in 2020 from 2.3% in 2019.
This is good news for some non-essential segments badly hit by the lockdown. Yet, Fitch warns that demand side risks emerging among consumers globally could nevertheless still see weaker consumer spending for Singaporean consumers this year. Economic backlash from the Covid-19 recession, disruption of global consumption patterns and residual fear of social contact keep consumption levels depressed for 2020. Social distancing, health checks and other measures retained to prevent viral spread could weaken the appeal of shopping and dining out.