Smaller firms here scaling back expansion plans over trade war: Survey
Survey finds companies still pessimistic about first half of 2020
Smaller companies in Singapore are scaling back expansion plans next year in the wake of lower expectations amid the US-China trade war, a survey found.
It found that companies remain pessimistic about the first six months of next year, with all six sectors polled - commerce and trading, construction and engineering, manufacturing, retail and food and beverage (F&B), business services, transport and storage - downgrading their expectations for business expansion.
The gloom is most apparent in industries that rely on exports, given the uncertainties stemming from the trade war, although companies focused on the domestic market are not brimming over with good cheer either.
This comes as the Trade and Industry Ministry said last month that the economy is expected to grow by 0.5 per cent to 1 per cent this year, and 0.5 per cent to 2.5 per cent next year.
Professor Lawrence Loh from the National University of Singapore Business School said: "While the broader outlook involving all companies is more favourable, small and medium-sized enterprises (SMEs), in particular, face the brunt of changes more severely.
"They are sensitive to global fluctuations more than the larger well-resourced companies."
The quarterly survey by the Singapore Business Federation (SBF) and information services company Experian is used to compile an index that measures SME business sentiment.
It polled around 3,600 SMEs between Oct 7 and Nov 15 and looked at key indicators such as turnover, hiring and access to financing.
The overall index in the latest survey fell by 0.4 per cent compared with the previous one.
SBF chief executive Ho Meng Kit said yesterday: "It's important to note that the survey was done before the United States and China came to an agreement on a phase one trade deal.
"While we hope for some stability, our companies must be prepared to grapple with continued uncertainties. It is therefore wise to take a watch-and-wait approach as the business environment in the first half of next year may continue to stay depressed."
The SBF noted that export segments such as commerce and trading expect continued challenges, such as raising financing as lenders might be more cautious about extending credit to a high-risk industry that can be impacted by global headwinds.
But the trade war is also affecting domestic segments such as retail and F&B.
These sectors registered the most significant decline in turnover expectations in the new survey, the SBF noted.