Retail growth in APAC to continue amidst regional differences

In China, a net negative trend is expected to intensify.

Consumer sentiment trends observed across the Asia-Pacific region in 2024 are expected to continue into 2025, according to S&P Global Ratings.

In its report titled, Asia-Pacific Consumer Outlook 2025: Some Pain, Some Gain, S&P  forecasts steady retail growth in major countries covered by their analysis. However, regional disparities are anticipated.

In China, a net negative trend is expected to intensify, driven by a declining birth rate and a shift in consumer behavior toward lower-cost options. This is impacting sectors such as luxury goods, travel-specific retail, and premium product sales, according to S&P Global Ratings Credit Analyst Sandy Lim.

Meanwhile, in Japan, rating trends are expected to remain stable, supported by strong cash flows among entities. Despite this, a slowdown in domestic revenue growth is anticipated as consumers grapple with the highest inflation in four decades.

Higher labor and logistics costs could also hinder profitability gains in 2025, noted S&P Global Ratings Credit Analyst Kei Ishikawa.

In the Pacific region, particularly Australia, falling interest rates are expected to boost household purchasing power.

“This is more so for Australian consumers, which will benefit from a resilient labor market, recent tax cuts, and government stimulus to alleviate inflationary pressure," said Credit Analyst Puchen Wang.