Singapore SMEs turn gloomy as they welcome 2017

SME index fell below 50% for the first time in 7 years.

For the first time in 7 years, small and medium enterprises in Singapore fear that 2017 will bring more woes.

According to the latest index compiled by Singapore Business Federation (SBF) and DP Information Group which surveyed more than 3,600 SMEs, the mood registered below 50% at 49.8%.

Five of six industries now have a negative outlook for the coming half year, with the Business Services Sector recording a neutral Index score of just 50.5. In terms of turnovers, the business sector is slightly optimistic that their sales will be maintained, while SMEs engaged in Commerce/Trading, Construction/Engineering, Retail/F&B, Manufacturing and Transport Storage expect their turnover to decline in the next six months. 

It's the same in terms of profit outlook. For the second consecutive quarter, SMEs expect their profits to fall. The Profitability Expectations Index score fell from 4.76 to 4.71, indicating how reduced sales and high operational costs are compressing already lean profit margins and driving many SMEs into losses. Construction/Engineering, Manufacturing, Retail/F&B and Transport/Storage SMEs are all expecting lower profits in the first half of 2017.

SBF CEO Ho Meng Kit said SMEs are facing challenging conditions in the current economic situation. This is in line with the slowing overall economy as the Ministry of Trade and Industry narrowed Singapore’s GDP growth forecast for the year from 1.0 to 2.0 percent, to 1.0 to 1.5 percent.

"Against this pessimistic backdrop, it is worthwhile to note that three out of the seven Index scores, namely, Business Expansion Expectations, Capital Investment Expectations and Hiring Expectations signalled modest optimism. These signal resilience of our SMEs to look for growth in the medium term," he said