The OCBC SME Index for the first quarter of 2025 has contracted to 49.9, down from 50.7 in the previous quarter, marking a shift into contractionary territory after three quarters of expansion. This decline is attributed to the impact of US trade tariffs and global trade uncertainties. The index, which provides a barometer of SME business health in Singapore, shows that overall collections grew by 1.7% year-on-year, whilst payments remained flat.
The GDP Nowcast based on the OCBC SME Index for Q1 2025 is 3.7%, a decrease from the 5.0% recorded in Q4 2024, aligning with the Ministry of Trade and Industry’s advance estimates of 3.8%. The announcement of US tariff measures on 2 April is expected to further weaken the business outlook for SMEs, particularly in outward-oriented sectors such as ICT, Transport & Logistics, and Wholesale Trade. These sectors have significant overseas collections, with 7% directly from US-based payers.
The OCBC SME Business Outlook poll, conducted before the US tariffs, revealed that 41% of SME business owners felt conditions were unchanged, 36% saw improvements, and 23% noted deterioration. However, the ongoing global trade disruptions and supply chain reconfigurations have led over a quarter of business owners to identify geopolitical uncertainties and market competition as major challenges in the coming months.
Industries such as Transport & Logistics, Business Services, and Wholesale Trade are expected to be most affected by these factors. Additionally, SMEs have experienced an average wage bill increase of 9.7% in Q1 2025, with some sectors witnessing even steeper growth. As global trade norms evolve, the OCBC SME Index is likely to ease further, reflecting lower business confidence and increased economic pressures.
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