Singapore businesses are showing signs of growing unease over the country’s economic outlook, according to the latest National Business Survey 2025 – Singapore Budget Edition released by the Singapore Business Federation (SBF) on 28 May. The inaugural Business Sentiment Index (BSI), designed to reflect business confidence across key indicators, stands at 56.5, suggesting a cautious sentiment amidst persistent global economic uncertainty.
The survey, conducted between 27 March and 21 April 2025, gathered responses from 526 companies across various sectors. Small and medium-sized enterprises (SMEs) made up 83% of the participants. Results reveal that the proportion of businesses expecting the economy to worsen over the next 12 months has nearly doubled, from 22% in Q4 2024 to 40% in Q1 2025. This pessimism is evident in both SMEs and large companies, with negative outlooks rising from 23% to 41% and 18% to 38% respectively.
Sectors such as Hotels, Restaurants & Accommodations, Health and Social Services, and Retail Trade are particularly downbeat. The Hotels, Restaurants & Accommodations sector recorded the lowest BSI at 52.2, coupled with weak expectations in revenue, profitability, capital investment, and business expansion.
Rising costs remain a key concern. The BSI cost component average across all sectors stands at 68.0, indicating widespread expectations of higher expenses. The Real Estate sector leads with a BSI cost score of 78.4, followed by Hotels, Restaurants & Accommodations at 71.9.
Some sectors show signs of optimism
Despite the broader economic worries, some industries maintain a positive outlook. The Banking & Insurance (61.2) and Education (60.5) sectors show relatively strong sentiment, with both sectors also expecting higher revenue growth. The Education sector (60.8), Real Estate (60.4), and Banking & Insurance (59.1) also report high profitability expectations.
There is also moderate optimism for business expansion, with an overall score of 61.6. Education (66.6) and Banking & Insurance (65.6) again lead in this area. The Hiring Outlook stands at 57.7, showing that most businesses plan to retain their workforce. The sectors most confident about hiring are Hotels, Restaurants & Accommodations (67.4), IT & Related Services (61.8), and Education (60.1).
Budget 2025 measures receive strong support
Amidst concerns over economic uncertainty, Singapore’s Budget 2025 has been well-received. A majority of businesses (92%) reported feeling satisfied or neutral towards the measures, with satisfaction slightly higher among large companies (96%) than SMEs (92%).
The five most appreciated Budget initiatives include the 50% Corporate Income Tax Rebate (58%), enhancements to the Progressive Wage Credit Scheme (44%), the CPF transition offset (37%), the extended Senior Employment Credit (30%), and the new SkillsFuture Workforce Development Grant (16%).
Around half of the businesses (52%) believe that Budget 2025 will help make Singapore more conducive for starting new ventures and developing ideas, while 51% feel it supports local enterprises in scaling up and competing globally. Additionally, 38% of businesses say it helps manage cost pressures, and 37% believe it boosts confidence in Singapore’s business environment.
Ongoing transformation and financing hurdles
The survey shows continued efforts by businesses to pursue enterprise and workforce transformation. About 52% are actively engaging in enterprise transformation, while 49% are doing so for workforce development. However, challenges such as high technology adoption costs (47%) and manpower shortages for training periods (36%) are slowing progress.
Internationalisation (51%) and Artificial Intelligence (36%) are top priorities for transformation. Workforce-related support measures, such as the redesigned SkillsFuture Enterprise Credit (69%) and the new SkillsFuture Workforce Development Grant (59%), are the most popular.
On the financial front, liquidity issues remain. One in four businesses (22%) report moderate to severe credit constraints, with 35% of these saying they only have enough cash to last 3 to 6 months. In response, 46% have cut non-essential spending.
About 27% of businesses sought financing in the past year, mainly for local expansion (37%). Among the Enterprise Financing Scheme loans, the SME Working Capital Loan was the most used (63%), followed by Trade Loan (33%) and Project Loan (17%). Key financing barriers include high interest rates (46%), eligibility requirements (42%), and long approval timelines (42%). Businesses are calling for more flexible repayment options and access to alternative funding sources.
SBF CEO Mr Kok Ping Soon commented, “The weakened outlook reflects the increasingly uncertain operating environment facing businesses. Amidst the softening sentiment, businesses are satisfied with the Budget 2025 measures. Many believed it has helped address some cost concerns and make Singapore a better place to start new businesses or develop new ideas. It is heartening to see that transformation momentum remains strong. It is important that businesses stay the course in enterprise and workforce transformation by leveraging on the slew of government support. Accessibility and cost of financing have emerged as an area of concern. We hope to work with Government and financial institutions to better support our businesses which may now require larger financing lines and longer financing terms to deal with impact of US tariff measures.”
