SMEs upbeat about 2023 prospects; GST hike, energy prices and inflation still top concerns: poll

NEARLY 60 per cent of small and medium-sized enterprises (SMEs) are expecting economic conditions to improve in 2023, though the goods and services tax (GST) hike, rising energy prices and inflation remain key concerns, a survey by insurance provider QBE Insurance has found.

According to the eight edition of the annual survey conducted in Q4 2022, 59 per cent of SMEs polled said the economy had improved in 2022, while 59 per cent are expecting economic conditions in 2023 to improve. The poll surveyed 416 SME decision-makers in Singapore.

Additionally, 55 per cent of SMEs reported an increase in overall business sales in 2022. Some 58 per cent are expecting further increases in sales in 2023, while 41 per cent plan to increase the overall size of their business.

Most of the companies are preparing for a rise in expenditure in the next 12 months, the survey also found. When it comes to costs, 47 per cent expect to spend more on capital, while 42 per cent expect to hire more staff in 2023. This represents a “marked increase” compared with 2021, which saw 36 per cent expecting to spend more on capital and 29 per cent expecting to increase staff strength, the survey noted.

The top three concerns indicated by SMEs for 2023 were rising global inflation (76 per cent), rising energy prices (64 per cent) and the GST increase (63 per cent).

About 43 per cent of respondents said they were looking to the government to provide support and relief to cope with the economic effects, up from 32 per cent in 2021. Some 73 per cent said that they would resort to cost control measures to mitigate worsening economic conditions, with 44 per cent ready to downsize or streamline as a countermeasure.

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Ronak Shah, chief executive officer of QBE Insurance Singapore, said: “We are heartened to see that SMEs are largely feeling positive heading into 2023 and are ready to shift into expansionary mindsets for their businesses, especially as we head into yearly budget debates where policies concerning them are being discussed.”