Business sentiment improves in 2024 despite ongoing challenges—UOB

SINGAPORE: Business sentiment in Singapore saw a notable improvement in 2024, with 80% of businesses reporting a somewhat or very positive outlook, according to a recent report by UOB. This marks a 5% increase in overall optimism compared to the previous year.

The real estate/hospitality and construction/infrastructure sectors led the charge, with 88% of businesses in these industries expressing a positive sentiment. UOB highlighted that more businesses now view the current environment in Singapore as “very positive,” a stark contrast to past years.

“More businesses continue to perceive the current business environment in Singapore to be very positive, significantly higher compared with previous years,” UOB noted in its findings.

Medium-sized enterprises displayed the most optimism, with 87% expressing a positive outlook. This is in comparison to smaller enterprises, where 77% reported positive sentiment, and larger enterprises, where 75% shared the same view. The divergence in optimism may be reflective of differing challenges faced by businesses of varying sizes.

Despite the overall optimism, businesses are still grappling with significant macroeconomic pressures.

High inflation, rising operational costs, and manpower costs continue to be key challenges, affecting approximately 30% of businesses in 2024. However, the proportion of businesses reporting concerns over inflation has decreased from 37% in 2023 to 31% in 2024.

The professional and business services sectors were the hardest hit by inflation, with 44% of businesses in professional services and 40% in business services reporting significant impacts.

Operating expenses remain another key challenge. UOB’s report indicates that 37% of businesses are struggling with rising costs, with the business services sector (44%) and the construction/infrastructure sector (43%) most affected. Large enterprises are also feeling the pinch, with 54% reporting difficulties related to increased operating expenses, while 35% of medium-sized enterprises are similarly impacted.

In addition, businesses are facing challenges in customer retention, with 23% of companies citing difficulties in this area.

UOB’s survey, conducted in January 2025, involved 900 businesses from small, medium, and large enterprises across various sectors in Singapore.