Singapore Businesses Brace for Economic Challenges in 2024

Singaporean businesses express growing caution for the economy in 2024. Only 25% of them are confident in improvement, a significant drop from the 41% optimism recorded a year earlier. The Singapore Business Federation’s (SBF) National Business Survey reveals that 75% of them lack confidence in economic recovery, attributing concerns to economic uncertainties, tightening credit, rising costs, and workforce challenges.

Surveying 1,056 companies from September 14 to November 12, 2023, the SBF highlighted that 30% of SMEs anticipate economic deterioration compared to 22% of large companies. Among the various sectors, IT & professional services and manufacturing adopt a more pessimistic outlook. On the flipside, construction & civil engineering, banking & insurance, and logistics & transportation sectors maintain optimism.

Most Singapore businesses face increase manpower costs among other economic challenges

Companies grapple with increased costs, primarily in manpower (75%), followed by cost pass-through (58%) and higher utilities expenses (56%). Construction & civil engineering and manufacturing sectors experience the most significant impact. More than 80% of businesses report being affected by interest rate hikes and funding cost increases. Almost half face a credit crunch, with 11% lacking sufficient cash. These are just some of the economic challenges faced by Singapore businesses.

Despite challenges, 42% of businesses plan to increase employee salaries, and 26% aim to expand their workforce. With Budget 2024 approaching, Singaporean businesses seek government support for cost and cash flow management. Furthermore, some are seeking assistance in talent acquisition and retention.

Meanwhile, the SBF’s internationalization survey reveals a decline in businesses planning overseas expansion, dropping from 65% in 2022 to 57% in 2023. Both SMEs and large companies exhibit caution, citing unpredictable demand, partner insecurity, and operational costs as deterrents. SBF CEO Kok Ping Soon emphasizes the importance of overseas growth for local companies and outlines initiatives, including overseas business trips and events, to support international ventures.

In conclusion, Singaporean companies navigate a challenging economic climate marked by diminished confidence, increased costs, and internationalization concerns. The government’s role in supporting businesses through targeted policies becomes crucial for economic recovery and sustained growth.