Business Sentiments of Local Companies (July to September 2023)

- All Industries -  |  01 Nov 2023

Business sentiments remained weak but saw modest growth in July to September 2023

Infographics can be found at the end of the article.


Despite weak global demand and tight financial conditions, Singapore’s economy grew modestly in the third quarter of 2023 (July to September). The Ministry of Trade and Industry (MTI) reported advance estimates of Singapore’s GDP growth to grow by 0.7 percent, year-on-year. This was also better than last quarter’s growth of 0.5 percent.

IndSights Research found that the net balance of current business sentiment remained negative but the future outlook for both economic and business sentiments turned positive from the previous quarter. The sentiments seem to reflect the GDP growth. Adopting a cautiously optimistic outlook, companies additionally expected revenue to remain unchanged for the 6-month period of July to December, but were bullish about manpower growth in the months ahead.

The Monetary Authority of Singapore (MAS) expected prospects for the Singapore economy will be muted in the near term but should improve gradually in second half of 2024. For 2024, growth is projected to come in closer to its potential rate, with the output gap remaining slightly negative.

Economists anticipated that MAS would need to maintain a tight monetary policy amidst the inflationary pressures. In addition to the uncertainties over the US and China’s growth, the conflict in the Middle East is another potential downside risks to Singapore’s economy. The Israel-Hamas war is threatening to push up energy costs, even as Singapore gas, electricity and water tariffs are set to rise. 

READ ALSO: Report on Singapore’s Business Sentiment for the period April to June 2023


More companies are feeling optimistic about current economic situation 

Positive sentiments towards the Singapore economy increased slightly, with a net balance of 19 percent compared to 15 percent in the previous quarter. Future economic outlook turned positive, up 5 percentage points from the previous quarter.

Chart 1 of net balance score of perceptions of Singapore economy July to September 2023
Chart showing the net balance score of the perceptions of the Singapore economy from July to September 2023

Regarding the current business situation, we saw an improvement in the negative sentiments from the previous quarter. Companies were also notably positive about their future business situation.

Chart 2 of net balance score of perceptions of Singapore industry July to September 2023
Chart showing the net balance score of the perceptions of the Singapore industry from July to September 2023

Revenue expectations remained unchanged with tighter labour market conditions 

Companies adopted a cautious stance and expected overall revenue change to remain unchanged. This was a slight uptick from the negative net balance of -2 percent in the last quarter between April and September 2023.

A 15 percent net balance of Singapore companies expected manpower growth in the second half of the year, down from the 17 percent expected for the period of April to September 2023. IndSights’ findings aligns with the Ministry of Manpower (MOM) report that unemployment has shown a gradual uptrend and may continue to rise. 

READ ALSO: Besides manpower growth trends, you may also be interested in to read about the trends in flexible work arrangement.


Rising business costs remains the top business challenge concern 

Streamlining business processes was consistently the top strategy adopted by companies for the past three quarters. During the period July to September, companies also adopted business strategies such as pivoting to collaborating through partnerships, and expanding business locally. 

Through our industry chats, IndSights Research heard from a number of business leaders across various industries that rising business costs in the form of rental and manpower costs have been consistently one of the top concerns. The feedback from the chats is also reflected in the responses to the business sentiment survey, where companies cited rising business costs, uncertain or unfavourable economic factors, and manpower acquisition as their top challenges. These concerns remained top challenges for companies in the last three quarters. 

op three business challenges in the next twelve months
Top three business challenges in the next twelve months

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


Business perception on sustainability 

Singapore has pushed for a nationwide adoption of sustainable policies and green innovation. In fact, Singapore recently ranked third on the Hinrich-IMD Sustainable Trade Index for 2023, up from fifth rank in the previous year. The index measured the ability of 30 major economies to participate in the global trading system in a manner that supports long-term economic growth, societal development and environmental protection. 

With Singapore increasingly focusing on business sustainability, IndSights Research also looked at how aware businesses are regarding sustainable practices.

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 about half of the companies (52 percent) were aware of how they can adopt sustainable and green practices into their business model. We also found that 15 percent of companies did not have firm plans, but were open to adopting sustainable practices. In addition, 45 percent of businesses intended to train their employees to prepare for new sustainability requirements and regulations. 

In a roundtable that IndSights Research organised to discuss the topic of sustainability, participants shared that for particularly for Small, Medium Enterprises (SME), sustainability is not a key focus, especially when it isn’t apparent that sustainability will impact the SMEs’ profits. A further impediment to adopting sustainable practices was that SMEs will have to further invest in innovation and technology in this area. 

There have been reports in the media that sustainability directly and positively impacts businesses. It may be beneficial for the relevant agencies to consider a more concerted and focused approach to educating local businesses, especially the SMEs. 

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

Click here for the report on sustainability efforts and challenges.

MAS reported that Singapore’s GDP growth is expected to improve gradually over 2024 will indeed help to boost business confidence. However, we note that MAS also stated that the global economic outlook continues to be uncertain, and the domestic recovery could be weaker than expected.  

In addition, Singapore’s Core Inflation was also reported to have slowed and is projected to broadly decline over the course of 2024. As a positive reflection, Goldman Sachs raised its 2023 GDP growth forecast to 0.8 percent from 0.5 percent following the higher-than-expected flash GDP figure and does not expect additional MAS tightening as core inflation pressures are expected to ease over the coming year. 

It seems that businesses can be cautiously optimistic about the economic conditions with signs of recovery in the short term. However, as at the time of writing, recent events such as the Middle East conflict may have a potential destabilising impact. Stay tuned for the findings in the next quarter.

READ ALSO: Register here to participate in our business sentiment survey to receive your full report for the next quarter



About the Study

Our recent survey was conducted from July to September 2023 with 1,344 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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