Singapore business sentiment weakens amidst economic uncertainties, tightening credit, cost increases and manpower challenges
SBF National Business Survey 2023/2024
Local business sentiment has weakened with only 25% of businesses confident that the economy will improve in the next 12 months, compared to 41% a year before.
Amidst economic uncertainties, more SMEs (30%) compared to large companies (22%) believe that the economy will worsen in the next 12 months. Businesses in the IT & Professional Services (32%) and Manufacturing (31%) sectors have a more bearish outlook, while those in the Construction & Civil Engineering (30%), Banking & Insurance (29%) and Logistics & Transportation (28%) sectors are more optimistic about the economy in the next 12 months.
Over 8 in 10 businesses (83%) are impacted by interest rate hikes and increase in cost of funding in the past year. Close to 1 in 2 businesses (46%) faced between a slight to severe credit crunch with the proportion of those that do not have sufficient cash to operate increasing from 6% to 11%. Businesses in the Construction & Civil Engineering (63%), Wholesale Trade (39%) and the Retail, Real Estate, Hotels, Restaurants & Accommodations (47%) sectors are most affected by the credit crunch, while the Logistics & Transportation sector has seen the largest improvement in credit conditions from 48% to 70%.
9 in 10 businesses acknowledge the importance of business transformation but the top challenges faced in technology adoption were high cost (64%), expensive licensing payments (31%), upskilling of staff to keep up with new technologies (29%) and lack of management expertise (29%). Businesses were also concerned about cybersecurity (45%), emerging technologies such as AI (35%) and increased expectations on ESG (34%).
In the face of increased cost and manpower challenges, more Singapore businesses hope that the Singapore Budget 2024 will support them in addressing cost (86%) and cash flow management (65%) challenges. Businesses would also like to have support in hiring/attracting, developing, and retaining talent (53%).