The COVID-19 pandemic has constrained global growth and slowed economic activities around the world. The SBF-Experian SME Index for 4Q20 – 1Q21F registered an overall reading of 46.3, the lowest reading since the inception of the SME Index (“the Index”) in 2009.
Restrictions enacted worldwide to stem the spread of COVID-19 have led to steep declines in key global markets. The GDP of the United States contracted by a record 32.9% in 2Q20, while China has decided against setting a GDP target for the first time in decades, highlighting the extent of the uncertainties dominating the global economy.
The Asia-Pacific region’s economy is expected to contract by 3.7% in 2020. Singapore saw its economy contract by 13.2% year-on-year in 2Q20, prompting the Ministry of Trade and Industry (MTI) to downgrade its GDP growth forecast for 2020 to -7% to -5%. The weaker outlook was attributed to a depressed external economic environment, continued closure of international borders, and the delayed resumption of activities for sectors reliant on foreign workers.
The Index – a joint initiative of the Singapore Business Federation (SBF) and Experian – measures the business sentiment of SMEs in Singapore for the next six months (October 2020 to March 2021). The Index comprises inputs from SMEs on their expectations in seven key areas – Turnover, Profitability, Business Expansion, Capital Investment, Hiring, Capacity Utilisation, and Access to Financing. This Index is based on a survey of more than 2,100 SMEs across six sectors – ‘Commerce / Trading’,
‘Construction / Engineering’, ‘Manufacturing’, ‘Retail / F&B’, ‘Business Services’, and ‘Transport / Storage’. The survey was conducted between 13 July to 21 August 2020. With most SMEs experiencing difficulties assessing the impact of COVID-19 during the circuit breaker period, no survey was conducted for the period 3Q20 – 4Q20F.