Survey reveals cautious outlook amid inflation, credit crunch, and manpower challenges
SINGAPORE: Higher costs continue to be the primary obstacle for businesses in 2024, according to the Singapore Business Federation’s (SBF) National Business Survey 2023/2024, released on Friday (Jan 5). The report highlights growing caution among companies as they navigate an uncertain economic landscape.
A significant portion of businesses, particularly small and medium-sized enterprises (SMEs), foresee a challenging year ahead. While 30% of SMEs believe the economy will worsen in 2024, only 22% of larger companies share this sentiment. Optimism has also declined, with just 25% of businesses expecting economic improvement, compared to 41% the previous year.
Rising Costs and Financial Strains
The majority of firms (58%) cited increased business costs as their top challenge, though this is down from 66% in 2023. Construction and civil engineering (69%) and manufacturing (65%) are the sectors most affected.
The main drivers of rising costs remain unchanged:
Wages: 75% of firms flagged this as a top concern.
Pass-through from suppliers: Cited by 58% of respondents.
Electricity costs: Affected 56% of businesses.
Interest rate hikes and increased funding costs in 2023 compounded financial pressures, with over 80% of firms impacted. Nearly half (46%) reported experiencing a credit crunch, and the percentage of businesses without sufficient cash to operate rose from 6% in 2023 to 11% in 2024.
Manpower Challenges
Manpower-related issues are the second most significant hurdle, with 53% of firms citing availability, 42% mentioning retention, and 39% highlighting foreign worker policies. These challenges are especially prevalent in sectors such as construction, logistics, transport, and manufacturing, where 68% of businesses report significant workforce constraints.
Sector-Specific Outlook
The survey reveals varying levels of optimism across industries. While construction, logistics, banking, and insurance sectors express greater confidence in 2024, IT, professional services, and manufacturing industries hold a more negative outlook.
Looking ahead, nearly half of businesses (47%) expect conditions to remain stable over the next 12 months, a notable increase from 33% in 2022. However, declining satisfaction with the current business climate—from 52% last year to 37% this year—reflects the broader uncertainties companies face.
As businesses brace for another challenging year, rising costs, manpower constraints, and financial pressures will continue to shape their strategies and resilience.
