Singapore SME profit outlook at its glummest since 2009

Five in six sectors expect profits to shrink.

For the next six months, small and medium enterprises (SME) in the city-state expressed muted sentiments, with profit outlook lingering on the pessimistic side.

According to the latest report by Singapore Business Federation and DP Information group, overall outlook index of SMEs dipped by 3.3%from the last quarter to a score of 50.2, the second lowest score in the index’s seven-year history.

The report, which surveyed over 3,600 SMEs on their business sentiments in the next six months, revealed that five out of six sectors expect their profits to shrink.

Transport and storage registered the largest decline with 4.2%, followed by business services with 4%. The pessimistic outlook was also shared by commerce, manufacturing, and construction and engineering.

For SBF CEO Ho Meng Kit, it is not surprising that SMEs remain largely gloomy about their growth prospects, given the tepid global and domestic economy.

"The lowest profit expectations and second lowest Overall Index in seven years indicate that our SMEs are barely keeping their heads above water. In part, this reflects the constraints of operating in Singapore where costs are high.," he noted.

He then urged SMEs to look overseas for growth.

"Take your chances and venture overseas...If you confine your business in Singapore, be prepared for a long period of low growth or even declining profitability," he stated.