Singapore businesses have a cautious economic outlook, as new data from global fintech Airwallex reveals seven in ten small and medium-sized enterprises (SMEs) here are bracing for a potential recession within the next two years.

Airwallex said in a statement on Thursday the independent research considered the challenges SMEs in Singapore would face amid the current economic uncertainty, how they would get around them, and how fintechs could support their future growth.

It said that rising costs is among the top three pain points for two-thirds of Singapore SMEs.

Rising costs from suppliers (35 percent) accounts for the highest rise in business cost, followed by employee costs (30 percent) and logistical disruption costs (23 percent) likely due to the pandemic.

“The challenges identified by SMEs in the survey findings are consistent with what we have been hearing from our customers, with rising costs and ways to manage it being a consistent theme in conversations,” said Low Cher Hao, Director, SME and Growth, Singapore, at Airwallex.

To optimize their operations amid an increasingly uncertain environment, Airwallex said that SMEs are taking a prudent approach to their financial spending, with nearly two-thirds looking to reduce business spending and/or optimise operations through technology in the next 6-12 months.

Improving efficiency (42 percent), growing revenue (40 percent), and market share (33 percent) were the top three priorities for SMEs surveyed.

“SMEs contribute significantly to Singapore’s economy and the findings emphasises the need for better solutions to manage their top concerns and encourage their growth and success,” Cher Hao added.

While SMEs continue to maintain a high level of confidence in traditional banking providers, the survey found that 93 percent of businesses in Singapore hold a high level of trust in fintech and digital platforms to support their business activities.

More than nine in ten SMEs have already adopted or are planning to adopt digital or fintech solutions to support their businesses’ financial needs.

The clear benefits of going digital include saving time (58 percent), ease of access (50 percent) and greater control over transactions (48 percent).

Amid a challenging economic environment, Airwallex said that businesses in Singapore retain a strong appetite for growth and expansion.

The survey found that nearly two-thirds (64 percent) of SMEs plan to expand their business overseas in the next 12 months.

Southeast Asia remains a top expansion region, with almost one in two SMEs (43 percent) looking to expand across the region.

The top five favored markets for expansion include Malaysia, the Netherlands, Indonesia, Vietnam and the Philippines.

“Singaporean businesses are entrepreneurial. They are constantly looking for ways to globalize their products and services,

“We see ourselves playing a critical role in helping them achieve their international ambitions,” said Cher Hao.

“Over a thousand SMEs in Singapore trust Airwallex to support the financial needs of their business; we are looking to empower them further, and welcome more like-minded businesses to join us,” he added.

This survey from Airwallex was carried out by Censuswide between March 16 to 23, 2023 among 255 SME business decision makers in Singapore (companies with 50 – 500 employees).

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