Business sentiment for the next six months at Singapore's small and medium-sized enterprises (SMEs) plunged to the lowest ever amid Covid-19-induced uncertainty over prospects for 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 SBF in a statement yesterday.
The construction and engineering sector posted the steepest fall in business sentiment, probably because of additional costs and restrictions on restarting building projects, the SBF said.
However, SMEs in the retail, and food and beverage sectors 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 (GDP) shrank by 13.2 per cent year on year in the second quarter, prompting the Ministry of Trade and Industry to cut its 2020 GDP growth estimate to a range of minus 7 per cent to minus 5 per cent.
The 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, SBF's chief executive officer, 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.
Mr James Gothard, Experian's general manager for credit services and strategy in South-east Asia, said the onus will be on SMEs to effectively utilise government support measures to boost competitiveness through means such as digitalisation.