Business Sentiments of Local Companies (April to June 2023)

- All Industries -  |  25 Jul 2023

Weaker business sentiments seen in the latest quarter (Apr-Jun 2023)
(Business Sentiment Survey Q1’FY23)

Singapore’s economy experienced modest growth in the second quarter of 2023, narrowly avoiding a recession. The reopening of China raised expectations for continued economic recovery in trade and tourism that will benefit Singapore’s economy. However, export demand has waned due to the impact of elevated interest rates and significant inflationary pressures. Despite facing challenges in the global economic landscape, the Ministry of Trade and Industry (MTI) maintained Singapore’s GDP growth for 2023 at 0.5 percent to 2.5 percent, and reported an expansion of 0.4 percent in the first quarter of 2023 on a year-on-year basis. While the growth rate was not substantial and it provided some relief over concerns of a potential recession, the government acknowledged that the external demand outlook for the rest of the year had weakened. 

Between April to June 2023, IndSights observed that amid the uncertain global financial conditions, ongoing geopolitical developments, and sluggish demand from China, both economic and business sentiments were weaker than the previous quarter. Revenue expectations extended its negative trend into the six months from April to September. Manpower growth is also expected to be conservative in the coming months. 

READ ALSO: Report on Singapore’s Business Sentiment for the period January to March 2023


Fewer companies are feeling optimistic about current economic situation

Positive sentiment towards the current economic situation has decreased, down by a net balance of 5 percent from the previous quarter. Future economic outlook also turned negative, as compared to the previous quarter.

Chart 1 of net balance score of perceptions of Singapore economy April to June 2023
Chart showing the net balance score of the perceptions of the Singapore economy from April to June 2023

Singapore firms’ sentiments regarding both their current and future business situations have been showing a consistently negative trend for the third quarter in a row.

Chart 2 of net balance score of perceptions of Singapore industry April to June 2023
Chart showing the net balance score of the perceptions of the Singapore industry from April to June 2023

Note: A net balance score is calculated by taking the difference between the percentages of respondents with positive responses against the percentages of respondents with negative responses. A plus sign in the net balance indicates a net upward trend (i.e., a higher proportion of companies were optimistic) and a minus sign denotes a net downward trend (i.e., a higher proportion of companies were pessimistic) of the economic/industry situation. 


Lower revenue expectations and tighter labour market conditions

The overall revenue change is expected to be negative amidst the persistent price pressures due to global supply chain disruptions. The YoY (year on year) revenue expectations for the six-month period of April to September 2023, was lower than that for January to June 2023, with a negative net balance of -5 percent, down from -2 percent.

Reflecting a tight labour market, Singapore companies are expecting a positive 9 percent net balance in manpower growth for the period of April to September 2023, down from the 17 percent expected in the first half of 2023. Due to worsening financial outlook and inflationary pressures, companies may turn to other strategies such as streamlining business processes to mitigate manpower challenges. 

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Better resource planning and development of digital capabilities to meet business challenges ahead

Business leaders were found to favour the following business strategies the next 12 months, where streamlining of business processes, developing digital business capabilities, and expanding their business locally were among the top strategies selected.

Top three business strategies in the next twelve months
Top three business strategies in the next twelve months

In addition, the top business challenges expected by companies in the next 12 months were: Rising business costs, manpower acquisition, and economic uncertainties were the top challenges.

READ ALSO: If you would like to understand sector-specific strategies and challenges, participate in our current survey to receive your full report


Work Pass Framework

Among firms with foreign talent headcount, one-third rely on on-the-job training to facilitate transfer of new global capabilities from foreign specialists to locals.

IndSights found that businesses turned to the following processes to facilitate capabilities’ transfers between their foreign talent and local employees: 

Top three processes to facilitate capabilities' transfers between foreign talent and local employees
Top three processes to facilitate capabilities’ transfers between foreign talent and local employees


Business perception of sustainability

Setting its sights on becoming Asia’s leading green finance hub, Singapore has adopted a whole-of-government initiative to start incentives for green innovation and a strong ecosystem of policies. Developing a national sustainable finance taxonomy has been a key watchpoint, and Singapore has an advantage being the first in Southeast Asia to implement a carbon tax regime in 2019. 

With an increasing emphasis on business sustainability, IndSights Research also looked at how ready businesses are for the sustainability wave. 

Companies that were aware of how to adopt sustainable practices in their business.
Companies that were aware of how to adopt sustainable practices in their business.

IndSights found that half of the companies (47 percent) were aware of how they can adopt sustainable and green practices into their business model. We also found that 37 percent of the companies already had firm plans to adopt sustainable practices, or had the intention to do so in the next 12 months.

In addition, 42 percent of businesses intended to train their employees for new sustainability requirements and regulations. However, 16 percent of companies had no firm plans, but were open to adopting sustainable practices and plans. 

READ MORE: Singapore SMEs and sustainability: Taking a proactive stance

IndSights has thought articles on specific industries. The following are some industry perspective articles which covers sustainable industry practices:


While the relatively negative sentiments seem to follow the economic climate as reported by MTI, HSBC economist Yun Liu noted in a CNBC report that Singapore is likely to avoid a recession throughout the year.

In HSBC’s third-quarter outlook report, Liu pointed that the recovery ripples will mostly come from the travel and tourism sectors, though the number of Chinese tourists has yet to reach 2019 levels. “While the return of Chinese tourists is only back to 30% of the equivalent level (2019 levels), Singapore is, nonetheless, the champion in restoring direct flights with China. This paves the way for an acceleration in Chinese tourists in the coming months, supporting Singapore’s services sectors… Singapore is well position to lead the region with a swift recovery,” said Liu. 

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About the Study

Our recent survey was conducted from April to June 2023 with 1,545 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. 

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