(Bloomberg) -- Singapore restaurant owners face a gloomy Lunar New Year, with Covid-related interruptions signaling that even countries with a good handle on cases will suffer until the pandemic is under control globally.

A labor-supply crunch in the food and beverage sector and government restrictions on office-sponsored parties will weigh even more on a sector that’s already suffering more than the general economy. Across the region, much of which marks the holiday starting Friday, this year’s celebrations are likely to be muted given the ongoing struggle to control outbreaks of Covid.

“Stricter engagement rules, foreign worker shortages and food-supply disruptions will mean a far more quiet Chinese New Year,” said Chua Hak Bin, senior economist at Maybank Kim Eng Research Pte in Singapore.

Restaurants and other sectors, including aviation and recreation, will struggle “far beyond this year,” Chua said. “Singapore’s economic recovery will be sluggish and uneven.”

While overall retail sales fell 3.6% in December from a year earlier, food and beverage, including online purchases, were down 16.5%, their eleventh straight month of double-digit declines.

The sector’s difficulties at the holiday underscore the challenge in raising Singapore’s growth from its worst annual pace in more than a half-century last year, even as local cases of Covid-19 hover close to zero and a vaccination drive is underway. The government is expected to include more industry-specific stimulus measures when it releases its new budget Feb. 16.

That’s one day after the government reports final fourth-quarter and full-year gross domestic product data. The latest official estimate is that the economy shrank 5.8% in 2020 and will expand 4% to 6% in 2021.

The data on food and beverage sales suggest that residents who normally travel out of Singapore during the holiday, but are stuck in town this year, won’t make up for the loss of revenue from international visitors who can’t enter the city-state.

Maybank’s Chua says the hit now will be more serious than over the Christmas period, with total retail sales expected to fall by about 7% in January and February from a year earlier, almost twice the pace of December’s decline.

While much of the city-state this weekend will be tossing fish -- a holiday tradition the government has asked to be celebrated without the usual enthusiastic shouts -- food and beverage vendors face a laundry list of challenges:

  • Restrictions on social gatherings to eight or fewer people, and a holiday limit of two household visits per day, are likely to dampen orders
  • Restaurants will miss out on the usual revenue boost of office-sponsored holiday parties, which have been banned this year
  • There’s a labor crunch as foreign workers, including from Malaysia, are taking more time off to transit home and quarantine on return, Chua observes
  • Food prices have jumped alongside supply disruptions, matching a regional trend

Restaurant owners will be among those looking for more aid in the annual budget.

The retail and food sector “remains hopeful that there will be continued policy support this year in order to keep the players afloat for longer,” Selena Ling, head of treasury research and strategy at Oversea-Chinese Banking Corp. in Singapore, said in a Feb. 8 report.

The retail sales data for February are scheduled for release April 5.

©2021 Bloomberg L.P.