The OCBC SME Index for the third quarter of 2025 held steady at 50.5, indicating continued expansion, as reported by OCBC Bank. This stability reflects a robust performance in externally oriented sectors such as Wholesale Trade, ICT, and Manufacturing, which saw significant growth in collections and payments. However, domestic-facing industries like Food & Beverage and Building & Construction experienced contractions due to softer local demand.
The GDP growth Nowcast, based on the OCBC SME Index, suggests a growth rate slightly above 3.5%, a decrease from the previous quarter’s 4.4%. This aligns with the Ministry of Trade and Industry’s GDP advance estimates, which moderated to 2.9% in the same period. Eric Ong, Head of Enterprise Banking at OCBC, noted, “As global trade dynamics continue to evolve, we expect the outlook for SMEs to ease in the coming quarters as they contend with challenges from supply chains and US tariffs.”
Looking forward, SMEs are expected to face a more challenging environment. Cautious consumer sentiment and the normalisation of tourism growth are likely to impact consumer-facing sectors. Additionally, ongoing US tariff issues have affected 44% of SMEs, prompting many to explore alternative markets. Despite these challenges, opportunities remain in AI-related applications and manufacturing, offering potential growth for SMEs willing to pivot.
The OCBC SME Business Outlook poll revealed that 53% of SME business owners expect conditions to remain the same or worsen over the next six months, whilst 47% anticipate improvement. This sentiment reflects the mixed performance across sectors, with externally oriented industries showing resilience and domestic sectors grappling with cost pressures and weaker demand.
