Business Sentiments of Local Companies (April to June 2024)

- All Industries - | 13 Aug 2024

Business optimism has significantly improved, with a bright economic outlook for April to June 2024; positive outlook expected to continue

Infographics can be found at the end of the article.

In the second quarter of 2024, Singapore’s economy grew by 2.9 percent compared to the same period the previous year, driven by gains in manufacturing and construction. However, services slowed, partly due to the higher base in the first quarter, set by major events like Taylor Swift’s concerts.

Against this backdrop, the Monetary Authority of Singapore (MAS) kept its monetary policy unchanged, in favour of a stronger Singapore dollar. This decision is consistent with their revised estimate of the consumer price index, which suggests that overall inflationary pressures are easing.

Despite this, economists note that rising imported inflation, especially in food, could still pose challenges, such as increased operational costs, potential price hikes, and disruptions to supply chains. As a result, MAS is expected to maintain its strict policy stance to manage these inflationary pressures.

Looking ahead, MAS anticipates that economic growth will improve in the second half of 2024, reflecting a positive outlook for the rest of the year.

Singapore companies are benefiting from a major improvement in business environment

Singapore businesses are observing a steady improvement in both the current and expected economic outlook. Between April and June 2024, positive sentiment towards the economy went up to 25 percent. Meanwhile, expectations for the future also improved from a net balance of -3 percent to three percent.

Fig. 1: Net balance score of perceptions of the Singapore economy April - June 2024 — Fig. 1: Net balance score of perceptions of the Singapore economy April – June 2024

In the same vein, industry sentiments have been trending upward and demonstrated improvement this quarter.

Fig. 2: Net balance score of perceptions of Singapore’s industry April - June 2024 — Fig. 2: Net balance score of perceptions of Singapore’s industry April – June 2024

EXPLORE LAST QUARTER’S INSIGHTS: Business sentiments show improvement in January to March 2024 despite challenges

Positive revenue shifts for current and future quarters; manpower needs to remain stable

In the second quarter of 2024, companies reported an increase in revenue and remained optimistic about growth in the coming quarter, with expectations of stable manpower levels.

This positive outlook is echoed by ManpowerGroup’s employment survey, which shows 44 percent of employers planning to expand their workforce, while 24 percent anticipate cuts.

However, the manpower and talent challenges in Singapore have grown more pressing due to declining birth rates and a rapidly ageing population, leading to a diminishing pool of working-age adults. This issue remains a political challenge, as many Singaporeans are concerned about the implications.

The government introduced various measures, including stricter controls on foreign workers, protections for local employment, and initiatives to enhance local talent through training and international exposure. However, these measures primarily focus on safeguarding the local workforce and do not directly address the broader manpower shortage.

For companies, expanding their workforce remains a significant challenge as they must manage the complexities of scaling their teams while contending with rising costs related to recruitment and retention. Balancing these demands, alongside managing increasing business expenses, continues to be a focus for many businesses striving for sustainable growth.

PARTICIPATE NOW: Share with us your thoughts on manpower and revenue growth in our latest Business Sentiment Survey

Rising business costs continue to be the primary concern for businesses

At our recent IndSights Business Forum, businesses are advised to embrace calculated risk-taking and leverage data-driven insights and predictive analytics to become the industry’s first movers rather than waiting for a guaranteed demand before making business decisions.

The panellists stressed the necessity of commitment to digitalisation, which requires leveraging a skilled local workforce to navigate the evolving digital landscape and address the digital divide. Strategic automation across various functions was also highlighted as crucial for optimising cost-efficiency and enhancing agility.

Top three challenges faced by Singapore businesses

Will open-source tools redefine business operations?

Over the next three years, 57 percent of surveyed companies plan to integrate at least one artificial intelligence (AI) tool into their operations. Notably, about half of these companies are choosing to implement open-source AI solutions.

57% of Singapore companies plan to adopt at least one AI tool

This trend reflects growing confidence in AI technology and highlights a significant shift towards leveraging open-source tools, which offer cost-effective and customisable options for businesses aiming to enhance their operational efficiency and innovation capabilities.

REGISTER NOW: Access the full AI adoption series by participating in our surveys

The government steps up with initiatives and support programmes for businesses

The Singapore government is amplifying its support for businesses through various new initiatives. The EU-Singapore Digital Trade Agreement (EUSDTA) will bolster these efforts by clarifying digital trade rules, enhancing connectivity, and eliminating barriers like data localisation requirements, thereby facilitating more secure and efficient transactions between Singapore and the EU.

For companies aiming to expand regionally or globally and develop digital capabilities, several resources are available:

These programmes are designed to help businesses navigate challenges, embrace digital transformation, and seize new opportunities in the global market.

Singapore companies are aware of sustainability, but few have plans to implement

Over half of Singapore businesses are aware of how to adopt green practices and plan to train their employees on these methods. However, 14 percent still lack firm plans for adopting sustainable practices.

54% of Singapore businesses are aware of how they can adopt sustainable practices into their business model

Despite this growing awareness, 58 percent of Singapore CEOs are currently deprioritising decarbonisation in favour of technology investments, particularly in AI. Factors such as economic challenges, competing priorities, concerns about greenwashing, and shareholder demands have contributed to this shift away from sustainability. These trends are also reflected in IndSights Research’s recent poll on sustainability.

Transitioning to a sustainability-focused business model requires a significant cultural change, moving away from traditional focuses on revenue and cash flow. For many Singapore companies, this shift involves substantial adjustments to adopt a customer and sustainability-centric approach, with long-term success requiring continuous effort and adaptability.

READ ALSO: Singapore yellow biotechnology company creates new hope for sustainable food production

About the study

Our Business Sentiment Survey was conducted from April to June 2024 with 1,538 business leaders from 23 industries: Environmental Services, Food Services, Logistics, Retail, Information & Communications, Security, Wholesale Trade, Real Estate, Air Transport, Land Transport, Sea Transport, Hotels, Construction, Financial Services, Professional Services, Food Manufacturing, Healthcare, Education, Electronics, Energy & Chemicals, Marine & Offshore, Precision Engineering, and Aerospace.

Full abridged version of the findings is available upon request at https://www.indsights.sg/contact

About IndSights

IndSights is a market research company specializing in understanding the business landscape in Singapore. Our purpose is to enable the Singapore business community through data and insights. How we do this:

Sharing of survey insights with businesses who participate in our surveys
Roundtable discussions, business forums and networking sessions with like-minded peers
Thought leadership on current business topics

If you are a business based in Singapore and believe having the right data is important for decision-making, we would like to invite you to join us and 16,000 other businesses.

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