Business confidence has taken a turn for the worse, with bosses worried about the global economy, higher costs and financing difficulties.
The Business Optimism Index (BOI) for the first three months of next year is at -1.22 percentage points, down from +2.87 percentage points for this quarter, according to the Singapore Commercial Credit Bureau (SCCB)'s latest quarterly survey.
It is the second-lowest figure recorded over the past four years.
The BOI is derived by subtracting the percentage of pessimists from the percentage of optimists.
The index is compiled through surveying 200 business owners and senior executives representing major industry sectors on their business expectations.
Compared with last year, the index improved slightly but remained in the contractionary zone.
Last year, it posted -2.93 percentage points for the first quarter of 2016, compared with -1.22 percentage points for the first quarter of 2017.
The index has improved slightly from last year but still remains on the pessimistic side of the scale.
Global economic uncertainty was the top challenge for 60 per cent of managers surveyed. Lack of financing, reduced sales and higher costs were also cited as challenges.
Wholesale trade and financial services were the most pessimistic sectors, with low expectations on sales volumes and net profits.
Bosses attributed the pessimistic outlook to weakness in the wholesale trade of petroleum, petroleum products and oil, while the financial industry pointed to declines in offshore financial intermediation, fund management and security dealing.
The services sector was the most optimistic, due to an increase in tourist arrivals. The food and accommodation, information and communications, and social services sectors also improved.
However, slightly more firms expect to invest less for expansion next year than this year, said SCCB chief executive Audrey Chia.
She noted that business confidence is expected to remain muted.
"For 2017, firms are projected to cut back on investments for business expansion," she said.
Mr Kurt Wee, president of the Association of Small and Medium Enterprises, said the survey results reflected the mood on the ground, but he did not think that business sentiment was better than last year.
He added: "Many businesses are in the consolidation and rationalisation phase. They do not see a turnaround in the near future."
Mr Wee said the association's main priority is to urge Singaporean companies to internationalise, to mitigate the challenge of a slowing economy.