• Published on 16 April 2024
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OCBC SME Index for 1Q2024 up by 0.2, but still contracting

The OCBC SME Index registered a reading of 49.7 in the first quarter of 2024 (1Q 2024), edging up by 0.2 from the fouth quarter of 2023 but remaining contractionary for the fifth consecutive quarter.

Small and medium-sized enterprise (SME) collections and payments grew by 1.4% and 1.9% year-on-year against the backdrop of bumpy disinflation trends and elevated cost pressures.

The 1Q 2024 gross domestic product (GDP) Nowcast is projected at 2.5%, lower than the 2.8% growth in the previous quarter. The Nowcast is aligned to the 1Q 2024 GDP advance estimates released by the Ministry of Trade and Industry at 2.7%.

While the performance of outward-oriented industries such as manufacturing, transport and logistics and wholesale trade have improved slightly as compared to the previous quarter, SMEs in the domestically oriented sectors such as education and food and beverage (F&B) continue to outperform. Retail has also shown signs of resilience and registered modest growth over the past quarters, supported by sustained international visitor arrivals and healthy non-discretionary spending.

Linus Goh, head of global commercial banking, OCBC, said: “The OCBC SME Index is likely to remain flat in the near term before a gradual upturn towards the second half of this year. The turnaround in global electronics and a positive outlook for the ASEAN economies are expected to positively impact the outward-oriented sectors in Singapore. However, downside risks do remain with sluggish domestic consumption and export growth from the Chinese market amid lingering geopolitical tensions. Business sentiments have turned slightly more optimistic compared to the previous quarter; 51% of the 1,200 SME business owners surveyed in the 1Q 2024 OCBC SME Business Outlook poll expect their businesses to perform better over the next six months, compared with 47% in the previous quarter.”

Re-disseminated by The Asian Banker