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Singapore Retail Sales Negative But Improving

James Boston
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Singapore Retail Sales Negative But Improving

Retail Sales in Singapore are still negative but improving this morning with the release of the sectors May update. Year on year the headline Retail Sales number is now showing a fall of -6.0% compared to -9.0% contraction in April, the market was expecting a move to -8.2%. Month on month the figure is running at 5.2%, this is in comparison to the previous months -0.7% reading and a market consensus estimate for an increase to 1.7% on the month.

Yesterday the GDP growth figures out of the city state of Singapore proved somewhat disappointing for an economy attempting a transition up the value chain. The year on year number for the second quarter came in at 2.1% GDP growth, this is an enviable figure in this global environment but for Singapore it represents a fall from the previous reading of 4.7%, markets were disappointed as they had been expecting a retracement but only to the 3.1% level. Quarter on quarter the situation is even less impressive, the reading for Q2 showed a contraction in the economy of -0.8%, this follows six quarters of solid growth and represents a drop from the previous quarters reading of 1.6% expansion, consensus estimates were higher here and a reading of closer to 2.5% growth was anticipated by the markets.

Singapore is attempting to structurally reconfigure it’s economy away from the lower end manufacturing that has been the driver over the past decade and towards higher end industries such as pharmaceuticals and biotechnology. The current fall in economic growth represents the fact that Singapore is now caught between two stools, the new high value industries are still a relatively small proportion of the economy, albeit a growing one. Manufacturing however is still overweight, particularly in the low value add semiconductor sector and a global drop in demand for these products over the past few months has disproportionally hurt the economy.

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