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Singapore’s Economy Slows: Retail & F&B Feel the Pinch in 2H 2025
Singapore’s economic growth continues, but some sectors are showing signs of strain. While the overall economy expanded by 4.3% year-on-year in the second quarter of 2025, extending the 4.1% growth in the previous quarter [7, 14], retail and food & beverage (F&B) industries are experiencing headwinds [25]. This article examines the factors contributing to this slowdown and what it means for Singaporeans.
GDP Growth Moderates, Retail Sales Growth Stalls
Singapore’s Gross Domestic Product (GDP) grew 4.3% in the second quarter of 2025 [7, 14]. However, the Ministry of Trade and Industry (MTI) anticipates a moderation in growth for the second half of the year [15]. This is due to global economic uncertainty and potential impacts from international trade policies [7, 15].
Retail sales reflect this slowing momentum. In May 2025, retail sales only increased by 1.4% year-on-year, with flat growth (0.0%) when excluding motor vehicles [17]. This follows a 0.2% increase in April [17]. On a seasonally adjusted basis, retail sales excluding motor vehicles decreased 0.6% in May compared to April [17]. This suggests that underlying retail activity is weakening [17].
F&B Sector Growth Remains Sluggish
The Food & Beverage (F&B) sector is also experiencing modest growth. Sales of F&B services increased by 1.4% year-on-year in May 2025, which is an extension of the 1.3% growth in April 2025 [17]. However, like retail, F&B growth is not particularly strong [17]. Restaurants, in particular, faced a 4.2% decline in turnover in May [17].
Factors Affecting Retail and F&B
- Global Economic Uncertainty: Heightened global trade policy uncertainty and trade frictions negatively impact Singapore’s export-reliant economy [2]. This, in turn, affects business hiring, wage increases, and household spending [2].
- Resident Spending Abroad: The strength of the Singapore dollar encourages residents to spend overseas, diverting spending from local retail [2].
- Weakening Labour Market: Weaker domestic labour market conditions can further dampen household spending and retail sales [2]. Singapore’s seasonally adjusted unemployment rate edged up to 2.1% in the second quarter of 2025, from 2.0% in the previous quarter [4].
- Rising Operating Costs: F&B businesses face challenges such as high operating costs and manpower shortages [24].
Impact on Singaporeans
The slowdown in retail and F&B can affect Singaporeans in several ways:
- Job Security: Companies in these sectors may be more cautious about hiring or may even reduce headcount [2, 19]. While total employment rose by 8,400 in Q2 2025, some outward-oriented sectors like retail trade, professional services, and information & communications registered declines in resident employment [11, 20].
- Wage Growth: Wage growth may be limited due to economic uncertainty [2, 19]. The proportion of firms expecting to raise wages declined from 24.4% in Q2 2025 to 22.4% in 3Q 2025 [19].
- Investment and Savings: With potential concerns about job security and wage growth, Singaporeans may become more cautious with their spending and **investment in Singapore**, focusing instead on essential goods and services. This could impact **wealth accumulation** and the ability to achieve **long term investment** goals [2].
- Retirement Planning: Slower economic growth can also have implications for **retirement planning**. Singaporeans may need to reassess their financial goals and consider strategies to ensure they have sufficient funds for retirement. This might include exploring **equity investment** options to potentially enhance returns over the long term [15].
MAS Maintains Monetary Policy
The Monetary Authority of Singapore (MAS) has kept its exchange rate-based monetary policy unchanged [16]. MAS forecasts core inflation to average 0.5–1.5% for 2025 [15, 16]. While the MAS has kept its forecast for 2025 core inflation, which excludes private travel and accommodation costs, unchanged at an average of 0.5% to 1.5% [16], uncertainties to the outlook remain high [23].
Navigating the Economic Landscape
While Singapore’s economy is still growing, the moderation in retail and F&B highlights the challenges posed by global economic headwinds. Singaporeans should remain adaptable, and adaptable to the changing landscape. Staying informed about economic trends and making sound financial decisions will be crucial for navigating the economic landscape in the second half of 2025.
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