[SINGAPORE] The local business outlook for the three months ahead has declined for a second straight quarter, data from the Singapore Commercial Credit Bureau (SCCB) showed.
Singapore’s Business Optimism Index (BOI) for Q2 fell to 4.1 percentage points, from 4.3 percentage points for Q1. The index stood at 5.2 percentage points a year earlier, SCCB said on Monday (Mar 16).
The dip comes alongside a worsening geopolitical outlook beyond Q1. Prices of energy and other commodities have soared since the US-Israeli attacks on Iran on Feb 28.
The war has tilted the odds in favour of a tightened monetary policy in April, with one core inflation forecast at 1.3 per cent in Q2 and 1.8 per cent in the second half of the year.
“Business optimism has softened for the second straight quarter, reflecting the cautious stance that many companies are now adopting amid heightened global geopolitical uncertainties,” said Audrey Chia, chief executive of SCCB.
“The moderation in selling prices and new orders also indicates that businesses are facing increasing margin pressures even as demand stabilises.”
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SCCB’s quarterly survey asks 200 business owners and senior executives representing major industry sectors in Singapore if they expect increases, decreases or no changes in six indicators: volume of sales, net profit, selling price, new orders, inventory and employment.
The latest survey was conducted from mid-February to early March.
Despite the decline for Q2, all six indicators were “expansionary”, the bureau noted.
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The Ministry of Trade and Industry on Feb 10 – before the Iran war broke out – upgraded its GDP growth forecast for 2026 to between 2 and 4 per cent.
Wholesale, financial sectors positive
The wholesale sector’s sentiment for Q2 “improved visibly”, SCCB noted. Sales volume, net profit, and selling prices indicators for the sector rebounded sharply to 6.7 percentage points, from a contraction for Q1.
This optimism was underpinned by a surge in expectations for new orders. The indicator jumped to 26.7 percentage points, up 20 percentage points quarter on quarter.
The financial sector also had a strong outlook for the quarter ahead. Sales volume and net profit indicators came in at 21.4 percentage points. This was supported by increases in new orders and employment levels to 7.1 percentage points each, even as the selling price indicator moderated to zero.
While remaining in positive territory, sentiment in the transportation and services sectors cooled.
Transportation firms expect solid sales and net profit growth, with the indicators coming in at 8.3 percentage points apiece. However, momentum in new orders and employment fell from Q1 highs.
The services sector, meanwhile, anticipates a broader softening in Q2, with sales, net profit and selling prices indicators moderating to 2.3 percentage points; new orders slid to zero.
On the industrial front, manufacturing sentiment improved moderately, pulling out of a sluggish Q1. Indicators for sales, net profit and employment levels all rose to 7.4 percentage points. The sentiment for new orders climbed out of negative territory to zero.
The construction sector could face the most challenging landscape in Q2. While volume of sales and net profit indicators remained marginally expansionary at 7.7 percentage points, the sector’s overall outlook was dragged by stagnant new orders and employment.
This came alongside a sharp drop in expectations for selling prices, with the indicator going into contractionary territory at minus 7.7 percentage points.
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