SINGAPORE - Business sentiment for the next six months at Singapore's small and medium-sized enterprises (SMEs) plunged to its lowest amid the Covid-19-induced uncertainty over prospects of global growth and economic activity.
The latest SBF-Experian SME Index, a joint initiative of the Singapore Business Federation (SBF) and information services company Experian, saw its reading of business sentiment drop to 46.3 points, the lowest level since the inception of the gauge in 2009.
"Uncertainties stemming from the Covid-19 outbreak and restrictions to slow the virus' spread have depressed overall expectations of Singapore's SMEs for the next six months," said the Singapore Business Federation (SBF) in a statement on Monday (Sept 28).
The construction and engineering sector posted the steepest fall in business sentiment, probably because of additional costs and restrictions on restarting building projects, SBF said.
However, SMEs in retail, food and beverage appeared to be less pessimistic, encouraged by the reopening of physical stores and eateries.
"Most SMEs appear to be adopting a wait-and-see approach, with aspirations pertaining to growth and expansion remaining neutral," the statement said.
The global economy came to a virtual halt in the first half of the year due to curbs on mobility to stem the Covid-19 spread. Singapore's gross domestic product shrank by 13.2 per cent year on year in the second quarter, prompting the Ministry of Trade and Industry (MTI) to cut its 2020 GDP growth estimate to a range of minus 7 per cent to minus 5 per cent.
SBF said SMEs across most sectors remain cautious, scaling back growth and expansion plans.
"Muted readings across business expansion expectations and capital investment expectations suggest that SMEs may be adopting a wait-and-see approach amid the ongoing economic uncertainty," it noted.
Mr Ho Meng Kit, the chief executive officer of SBF, said that business sentiment has suffered as Covid-19 continues to adversely impact the global economy although he expressed hope that things will improve.
"Some safe resumption of business travel and a calibrated reopening of sectors will further boost economic activities in Singapore. This will hopefully raise sentiments of businesses going forward," he said.
James Gothard, General Manager, Credit Services & Strategy, Southeast Asia, Experian, said the slew of supporting measures announced by the government will be important to tide the SMEs through this challenging period.
"The onus will also be on SMEs to effectively utilise government supporting measures to boost competitiveness through means such as digitalisation. This will be vital in allowing them to more effectively capitalise on opportunities that arise as Singapore embarks on its post-pandemic recovery plans," he said.