The OCBC SME Index for the second quarter of 2026 has moderated to 51.3, indicating continued expansion despite ongoing geopolitical uncertainties stemming from the Middle East conflict. This growth was largely driven by outward-oriented sectors such as Manufacturing, ICT, and Transport & Logistics, which benefited from robust trade and investment activities. Domestically oriented sectors, however, showed mixed performance, with Retail leading growth due to stable consumer demand.
Eric Ong, Head of Enterprise Banking at OCBC, highlighted the resilience of Singapore’s business ecosystem, noting that “outward-oriented sectors continued to outperform the domestically oriented sectors.” He emphasised the importance for SMEs to be future-ready by diversifying into new markets and leveraging risk management solutions to mitigate cost pressures.
Despite the expansion, SMEs face challenges such as elevated fuel and freight costs, which have persisted due to disruptions in Middle East shipping routes. These costs have been passed through the value chain, impacting goods-producing sectors like Manufacturing and Wholesale Trade.
The OCBC SME Index, launched in 2021, provides insights into SME business health using data from over 100,000 OCBC Bank SME customers. The index’s reading above 50 reflects improved business conditions, aligning with Singapore’s Purchasing Managers’ Index (PMI) and non-oil domestic exports (NODX), which have shown strong momentum.
Looking ahead, the index is expected to trend closer to neutral levels, with ongoing geopolitical risks potentially affecting demand. However, SMEs remain cautiously optimistic, with improved business sentiments reported in the latest OCBC SME Business Outlook poll.
