COVID-19 has been a long-drawn dampener on the global and Singapore economy. As new strains continue to develop, most countries have accepted that business must go – alongside the fight against COVID-19.
In Singapore, there has been a cautious re-opening. This is understandable as we’ve had several false starts to re-opening the economy in 2021, only to backtrack on safe management measures again.
Nevertheless, the economy is generally upbeat. Based on latest figures from the Ministry of Trade and Industry (MTI), Singapore’s GDP grew 7.1% in the whole of 2021. In 4Q2021, it grew 5.9%, underpinned by strength in the Manufacturing, which grew 14.0%, as well as Information & Communication, Finance & Insurance and Professional Services, which grew 6.0%.
The OCBC SME Index also mimicked this sentiment, with its 4Q2021 report depicting growth in all but one SME sector in Singapore. We look at the 3 best performing SME sectors in 4Q2021, and the only sector that contracted.
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Best Performing Sector: #3 Resources
OCBC SME Index Score: 52.8
The Resources sector had an OCBC SME Index score of 52.8 in 4Q2021 – making it the 3rd best performing SME sector in Singapore. Any score above 50 signifies an improvement, while a score below 50 shows a deterioration from the same period a year ago.
As Singapore does not have any natural resources to note, another thing we can glean from this is that cross-border trade activities are also improving.
Best Performing Sector: #2 Manufacturing
OCBC SME Index Score: 53.0
Expanding for four consecutive quarters, Singapore’s Manufacturing sector continues to be a beneficiary in the global economic re-opening and in-demand goods in the new normal. This was also backed by MTI figures, depicting a 14.0% expansion for the overall Manufacturing sector in 4Q2021.
The Precision Engineering sector scored 53.1 in the OCBC SME Index, underlining the importance of higher value manufacturing. Albeit, the other sub-sectors continue to show resilient growth numbers.
However, the OCBC SME Index report did caution that growth in the sector could moderate in light of a slowdown in China, and exacerbated by rising input and shipping costs.
Best Performing Sector: #1 Transport & Logistics
OCBC SME Index score: 54.3
As mentioned above, cross-border trade activities are ramping up as well. Naturally, this bodes well for the Transport & Logistics sector.
This translated into the best performing OCBC SME Index score of 54.3 for the sector in in 4Q2021. Looking at the score breakdown in the sector, we can see that Sea Transport continued to grow, while Land Transport remained relatively stagnant. This further underlines the strength of international trade activities picking up.
The Logistics sector was the strongest performer within the Transport & Logistics SME sector. This was lifted by an acceleration in e-commerce.
Nevertheless, the OCBC SME Index also mentioned that supply chains continue to be plagued by disruptions due to high demand, and that shipping costs are at elevated levels.
Worst Performing Sector: Food & Beverage
OCBC SME Index score: 47.9
Perhaps unsurprisingly, the F&B sector was the only SME sector that contracted in 4Q2021. Safe management measures continue to plague the industry, while stringent border measures may also be impacting costs.
Most sub-sectors – F&B Services, F&B Wholesale Trade and F&B Retail – all saw contractions in 4Q2021. This was mainly a result of lower collections on the back of a decline in customer traffic. The OCBC SME Index report also mentioned that online sales and deliveries is a major support for the sector with online collections digital platforms growing significantly from 2019.
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Perhaps showing some resilience, the Other F&B sub-sector, which includes manufacturing and farming, managed to remain flat during 4Q2021.
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