SMEs feeling bite of trade battles but retail and F&B buck trend
Singapore
SINGAPORE SMEs will look to expand in 2019, but show greater caution than six months ago as trade tensions continue to simmer, the latest SBF-DP SME Index showed on Monday.
A joint initiative of the Singapore Business Federation (SBF) and DP Information Group (DP Info), the index measures the business sentiment of over 3,600 SMEs for the next six months.
Compared to the last quarter's index of 51.5, the latest overall outlook for SMEs is slightly moderated, decreasing quarter on quarter to 51. A score above 50 indicates an expectation of growth, while a score below 50 signals a possible contraction.
The manufacturing sector is downbeat on growth outlook compared to other sectors, even as all sectors reported a decrease in growth outlook. In particular, the manufacturers are watching more closely the impact on profitability ahead, given fears of increased input costs.
But the retail and F&B (food and beverage) sector reflects the strongest outlook among the industries, due to the upcoming festive period and the rise of online delivery platforms. The retail and F&B sector is likely to be tapping online delivery platforms to meet the e-commerce demands, rather than doing so through their own capital investments, as their capital investment showed.
Retail stores and F&B outlets are also keenly looking for staff who have the expertise in working with digital platforms.
In a statement, Ho Meng Kit, CEO of the SBF, said: "It is understandable that our SMEs are cautiously optimistic, given the ongoing global trade tensions. The trade war between the US and China will have an impact on the global economy. But therein also lies opportunities."
He called on SMEs to be "quick to spot" the opportunities that arise due to the diversion of trade and re-shuffling of global supply chains.
"At the same time, they should also re-look their business strategies to diversify their markets and sources of inputs, to diversify risks," said Mr Ho.
The SBF-DP SME Index comprises inputs from SMEs on their expectations in seven key areas - turnover, profitability, business expansion, capital investment, hiring, capacity utilisation and access to financing.
