Credit Brief on Singapore SMEs Q1 2019
This is a quarterly report jointly published by the CRI at the Risk Management Institute of National University of Singapore and Validus Capital. Read the full report here →
Overall, the NUS-CRI 1-year PD decreased during Q1, from 27.28bps in December to 22.68bps in March. The credit profile of Singapore SMEs improved despite the slower than expected GDP growth at 1.3% in Q1 2019 based on advance estimates from the Ministry of Trade and Industry (MTI).
According to the survey conducted by the Singapore Business Federation and DP Information Group, Singapore SMEs show more wariness and exhibit weaker business sentiment amid slower economic growth and ongoing geopolitical conflicts. However, the survey shows an increase in capital investment expectations across all sectors and manufacturing saw the biggest rise. This could be due to the SME-related funding initiatives announced in Singapore Budget 2019.
The Budget has plans to help SMEs to get access to capital and adopt digital technologies. Some of the initiatives include extending the SME working capital loan scheme for two more years and the government to take on up to 70% of risk for bank loans to companies incorporated for less than five years. The automation support package will also be extended by two years to help companies reduce their automation costs.
Despite the more challenging environment, SMEs in Singapore continue to invest in their business with the assistance from the government which may help these companies to keep pace with changes and stay ahead in the long run.