SINGAPORE, April 9 (Xinhua) -- Singapore's retail sector is expected to see modest growth in 2026, supported by targeted government measures to ease cost-of-living pressures, although downside risks from geopolitical tensions remain, according to economists.
OCBC Group Research on Wednesday forecast the country's retail sales to expand by 2 to 3 percent this year, underpinned by the government's recently announced support measures aimed at cushioning households and businesses from rising costs.
The Singapore government has rolled out a support package worth nearly 1 billion Singapore dollars (about 784.34 million U.S. dollars) for citizens. Corporate support has also been enhanced, with the corporate income tax rebate raised to 50 percent from 40 percent, subject to a cap, to help firms navigate a more challenging operating environment.
"These measures provide timely support for the retail sector, particularly supporting defensive segments such as groceries and heartland spending," OCBC said.
However, the research house cautioned that the Middle East tension continues to pose near-term risks, with the impact dependent on the duration and intensity of the conflict.
Meanwhile, RHB Investment Bank said on Wednesday that the policy response is not a broad-based demand stimulus but a targeted effort to preserve household purchasing power for essential goods, protect business liquidity and maintain critical services as higher energy costs filter through the economy.
Still, UOB Global Economics and Markets Research warned that retail activity is likely to face headwinds for the rest of the year, despite a resilient start.
Middle East tensions are expected to weigh on consumer and hiring sentiment, amid concerns over supply chain disruptions and surging energy prices that could drive broader inflation and dampen global demand, according to the research house.
Tourism-related spending may also come under pressure as jet fuel prices spike above 200 dollars per barrel, prompting airlines to raise airfares.
"That said, the impact on retail sales may be partly mitigated by a moderation in outbound resident air departures, which could result in higher spending by residents domestically," it added.
Data from the Singapore Department of Statistics showed the city state's retail sales rose 8.3 percent year on year in February, reversing a 0.5 percent decline in January. The increase was partly due to the timing of the Chinese New Year, which fell in February this year.
For the first two months of 2026, the retail sales grew 3.5 percent compared with the same period last year. ■
