OCBC SME Index shows a full year of contraction, with only a few sectors maintaining expansionary growth
Singapore’s small and medium-sized enterprises (SMEs) have faced a year of contraction, with the OCBC SME Index showing a reading of 49.5 points in Q4 2023, marking the fourth consecutive quarter of contraction. This decline follows eight quarters of expansion between 2021 and 2022. Key sectors that had previously been in expansionary mode, such as education, food and beverage (F&B), and business services, have now turned contractionary.
Out of 11 industries tracked, only retail (50.9 points), building and construction (50.3 points), and healthcare (50.2 points) remained in the expansionary range in Q4. A reading above 50 indicates growth, while below 50 signals a downturn.
Despite external challenges, Singapore’s domestic sectors have generally performed well, with construction particularly benefiting from ongoing public and private projects. The healthcare sector saw a boost due to a surge in Covid-19 cases at the year’s end, which led to a return to expansion.
Looking ahead to 2024, the SME Index is expected to remain relatively flat in the first half, with rising costs weighing heavily on SMEs, especially those in contraction. Business sentiment remains cautiously optimistic, though concerns about global tensions and China’s economic recovery persist.
