Despite recent improvements in Singapore's GDP growth rate and the unlikelihood of inflationsurging, we maintain our modest view towards Singapore's consumer market. The ongoing labourrestructuring process is acting as a cap on growth, with wage growth likely to remain limited despite thecountry's relatively tight labour market. Although consumer confidence improved significantly during thefirst half of the year, 2017 retail sales growth is likely to remain below its potential.
We maintain our optimistic outlook for Singapore in 2017, with real private consumption growth forecast toincrease from 0.6% in 2016 to 3.0% in 2017. This acceleration in consumption will be largely driven by realwage growth on the back of a tight labour market.