Singapore SMEs register improved health in Q4: OCBC SME Index

1 in 5 SMEs are looking to expand overseas and improve business in 2025.

The OCBC SME Index expanded to 50.7 in Q4 2024, its third consecutive quarter of expansion.

Trade-related industries, particularly Transport & Logistics and Wholesale Trade, supported small and medium enterprises’ (SME) health.

OCBC attributed growth particularly to a recovery in global electronics demand and manufacturing output in the second half of the year, which in turn led the index to register broad-based improvements across all industries.

Exceptions are Healthcare and Education, although these are possibly seasonal, according to the bank.

The OCBC SME Index measures the business health and performances of SMEs in Singapore, using transaction data of 100,000 SME customers of OCBC. These SMEs have an annual sales turnover of up to S$30m.

A score of 50 represents zero change in the inputs from a year ago. A score above 50 signifies improved health, whilst below 50 shows a deterioration.

Prior to 2024, the index had logged five consecutive quarters of contraction, turning expansionary only in Q2 2024.

In the first half of the year, overall growth was muted partly by the weaker performance of outward oriented sectors, even as consumer facing sectors registered growth, OCBC said.

In 2025, the OCBC SME Index is likely to remain in expansionary range.

“SMEs are expected to benefit from the resilience in external demand led by the ongoing tech and electronics upcycle, and the easing of inflationary pressures,” OCBC wrote.

Downside risks will persist with elevated geopolitical tensions and increased uncertainty in the global trade environment.

SME business owners expect their businesses to improve or perform the same, according to the 4Q 2024 OCBC SME Business Outlook poll.

Nearly 1 in 2 (48%) of the nearly 1,000 respondents surveyed expect business to perform better over the next 6 months.

Over 1 in 3 (37%) are expecting their performance to remain the same.

Nearly 20% of business owners, meanwhile, named business expansion as their top priority in 2025, half with plans to grow their businesses overseas.

Another 20% of respondents plan to improve their businesses either by launching new products and services, or by scaling their digital capabilities via joining e-commerce or leveraging digital tools for better operating performance.

Over 1 in 10 (15%) expect a weaker first half in 2025, slightly higher than the 11% recorded in the Q3 poll, and mainly from the domestic industries.