Singapore business sentiment takes hit from Iran war as companies turn cautious: Survey
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SCCB said businesses are turning more cautious in their investment and expansion decisions, which could tamper growth in the short term.
ST PHOTO: NG SOR LUAN
SINGAPORE - Singapore companies grew more pessimistic as war broke out in the Middle East, sending energy prices soaring and disrupting supply chains, a survey released on March 16 showed.
The Singapore Commercial Credit Bureau (SCCB) said its Business Optimism Index (BOI) for the second quarter of 2026 fell to 4.1 percentage points, from 4.3 percentage points in the previous quarter and 5.2 percentage points a year ago.
Ms Audrey Chia, SCCB’s chief executive, said: “Business optimism has softened for the second straight quarter, reflecting the cautious stance that many companies are now adopting amid heightened global geopolitical uncertainties.”
While the survey’s key indicators remain expansionary, Ms Chia said: “The moderation in selling prices and new orders also indicates that businesses are facing increasing margin pressures even as demand stabilises.
“With heightened global uncertainties, businesses are adopting a more cautious stance in their investment and expansion decisions, which could temper growth in the short term.”
The Iran war has tilted the odds in favour of a tightened monetary policy in April, with one core inflation forecast at 1.3 per cent in the second quarter and 1.8 per cent in the second half of 2026.
SCCB’s quarterly survey asks 200 business owners and senior executives representing major industry sectors in Singapore if they expect increases, decreases or no changes in six indicators: volume of sales, net profit, selling prices, new orders, inventory and employment.
The latest survey was conducted from mid-February to early March.
Despite the decline for the second quarter, all six indicators were “expansionary”, the bureau said.
The Ministry of Trade and Industry on Feb 10 – before the war broke out – upgraded Singapore’s economic growth forecast for 2026 to between 2 per cent and 4 per cent.
Wholesale, financial sectors positive
The wholesale sector’s sentiment for the second quarter “improved visibly”, SCCB said. Sales volume, net profit and selling price indicators for the sector rebounded sharply to 6.7 percentage points, from a contraction for the first quarter.
This optimism was underpinned by a surge in expectations for new orders. The indicator jumped to 26.7 percentage points, up 20 percentage points quarter on quarter.
The financial sector also had a strong outlook for the quarter ahead. Sales volume and net profit indicators came in at 21.4 percentage points. This was supported by increases in new orders and employment levels to 7.1 percentage points each, even as the selling price indicator moderated to zero.
While remaining in positive territory, sentiment in the transportation and services sectors cooled.
Transportation firms expect solid sales and net profit growth, with both indicators coming in at 8.3 percentage points. However, momentum in new orders and employment fell from first-quarter highs.
The services sector, meanwhile, anticipates a broader softening in the second quarter, with sales, net profit and selling price indicators moderating to 2.3 percentage points; new orders slid to zero.
On the industrial front, manufacturing sentiment improved moderately, pulling out of a sluggish first quarter. Indicators for sales, net profit and employment levels all rose to 7.4 percentage points. The sentiment for new orders climbed out of negative territory to zero.
The construction sector could face the most challenging landscape in the second quarter. While volume of sales and net profit indicators remained marginally expansionary at 7.7 percentage points, the sector’s overall outlook was dragged by stagnant new orders and employment.
This came alongside a sharp drop in expectations for selling prices, with the indicator going into contractionary territory at minus 7.7 percentage points.
“The moderation in selling prices and new orders also indicates that businesses are facing increasing margin pressures even as demand stabilises,” said Ms Chia. THE BUSINESS TIMES
