Page 87 - ar2013

Business
Review
Independent Retail
Market Overview
the Economist Intelligence Unit
(EIU) expects growth to average
4.7% per annum. This is lower
than the long-term trend,
but a healthy rate of growth
nonetheless. It reflects lower
growth in the global economy,
much of the growth over the
past decade was fuelled by debt,
a situation that is unlikely
to return over the short to
medium-term.
Obviously, these growth forecasts
are dependent on a continued
global economic recovery, with
any stagnation or negative shocks
to the global economy likely to be
reflected in Singapore’s future real
GDP growth. Conversely, better
than expected global economic
performance will positively impact
Singapore’s real GDP growth.
INFLATION
From 2001 to 2013, consumer
price inflation averaged 2.3%
per annum. Years in which prices
recorded significantly higher
growth include 2008, 2011 and
2012, with price increases mainly
driven by rising housing, food and
transport costs.
Consumer price inflation
moderated to 2.4% in 2013
partly due to a moderation in
the increase of transport cost.
Despite the recent easing in
transport cost, together with
housing and food costs,
they continue to be the main
drivers of inflation. EIU expects
consumer price inflation to rise
marginally to 2.7% in 2014,
recording an average of 2.3%
per annum over the 2013-2018
forecast period.
Retail price inflation measures the
price variance of retail goods
and services. Retail price inflation
in Singapore typically trends
slightly below CPI, averaging
approximately 1.3% per annum over
2003-2013. Our initial estimate of
retail price inflation for 2013 is -0.3%,
reflective of the easing of prices
in watches and jewellery as well
as furniture and household goods.
We expect retail price inflation to
average approximately 1.0% per
annum during 2013-2018.
POPULATION
In June 2013, Singapore
Department of Statistics estimated
the total population of Singapore
to be approximately 5.39 million.
The total population figure for
2013 consists of 3.84 million
Singapore ‘residents’ (either
citizens or permanent residents)
and 1.55 million ‘non-residents’.
‘Non-residents’ primarily consist of
expatriate workers on long-term
working visas.
Singapore’s population growth
is largely driven by growth
in non-residents. Growth,
therefore, is largely contingent
on Government policy which
controls the level of migration.
We expect that with a slightly
below trend economic growth
outlook, the level of immigration
will be kept in check, and
non-resident population growth
might be lower than in recent
years. This segment is likely to
grow at around 4.3% per annum
over the next five years. Due to
an aging population and low
fertility rates, the resident
population should exhibit lower
and more stable growth over
time. We expect it to grow at
0.6% per annum over the next five
years in line with recent trends.
As a result, total population growth
is forecast at 1.7% per annum,
reaching 5.89 million by 2018.
ECONOMIC GROWTH
Singapore’s economic growth has
remained healthy in recent years,
with gross domestic product
(GDP) growing by 5.6% per annum
over 2001-2013. Despite weaker
economic performance due to
the global financial crisis (GFC)
in 2008 and 2009, the economy
has managed to rebound from
the downturn and maintain a solid
level of growth.
As a major trading nation and
financial hub, Singapore’s
economic performance is highly
correlated to the state of the
global economy. During the last
global economic boom which
ended in 2007, Singapore
benefited greatly with its economic
growth significantly above trend
levels. In more recent times, the
major issues confronting the global
economy, including the Euro crisis,
the slow rebound of the United
States (US) economy and the
slowing of the major emerging
economies, have all acted as a
drag on the Singapore economy.
However, the global economy
has stabilised over the past
12 months. The rebound in the
US finally appears to be taking
a firm hold, in contrast to the
stuttering of the past few years.
Japan, which has been a long-term
underperformer, has started to
see signs of improvement. Europe
appears to have muddled its
way through the Euro crisis, and
markets are now less nervous
about China than they have been.
All these developments point to
an improving outlook for Singapore.
After relatively weak growth of
1.3% in 2012, the Singapore
economy continued its gradual
improvement, growing by 4.1% in
2013. Between 2013 and 2018,
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