Singapore retailers are losing hope about their struggling businesses
Despite the fact that Singapore has eased restrictions further and reopened some sectors of the economy that were previously restrained due to Covid-19, retailers are worried that the move won’t make any significant changes to their already struggling businesses. According to official forecasts, the country’s economy is expected to shrink between 4% and 7% this year. Rose Tong, executive director of Singapore Retailers Association echoed retailers’ worries in a comment to CNBC: “Retailers are definitely facing significant financial stress during this period. Whether big or small, they’re actually finding it really difficult to meet their financial obligations.”
She added that some retailers expect sales to drop by around 50% due to the state of the economy: “[Retailers are] not very hopeful that business will be business as usual ... even after the first two weeks of euphoria shopping, or what we call revenge shopping.” Seonghoon Kim, Kanghyock Koh, Xuan Zhang have consulted the evidence in order to find out what the effect of Covid-19 has been on spending and saving in Singapore. “The first cases [of Covid-19] were diagnosed in late January. Households’ total consumption spending decreased in February and March 2020 by 7–9% when the total number of cases was still relatively low in Singapore. However, when the number of new cases soared and the nationwide partial lockdown policy was implemented in April 2020, consumption spending plummeted by 22%,” they write in their opinion piece.
“Most workers worked fewer hours or took pay cuts rather than becoming unemployed: the probability of working full-time declined by 1.2 percentage points and 6.0 percentage points in April and May, and monthly labor incomes decreased by 5.9% in April,” they add. After almost two months of partial lockdown, a decline in Covid-19 cases among migrant workers living in dormitories, enabled the country to reopen its economy at the beginning of June. The most recent further easing of the rules allows for shopping at retail stores and dining out.
In an interview with CNBC, Selena Ling, Head of Treasury Research and Strategy at Singapore bank OCBC, said: “We could actually see some pent-up demand and retail sales could snap back a little bit in June. But I would caution that this is probably going to be a fairly muted recovery from now. The litmus test really would be probably two weeks later when we see whether there is any pick up in terms of Covid-19 cases coming back again.” Ling also highlighted that the situation in China has indicated that if there was to be a second wave, it would put a break to consumer demand recovery. That being said, she believes that the Singapore economy has overcome the steep decline it faced in April.
Read Seonghoon Kim, Kanghyock Koh and Xuan Zhang’s opinion piece: Effects of Covid-19 on spending and saving
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