Credit Brief on Singapore SMEs Q1 2020
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 increased during Q1 2020, from 27.23bps in December 2019 to 47.74bps in March 2020. The credit profile of Singapore SMEs deteriorated amid the GDP contraction of 2.2% in Q1 2020 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, the business optimism of Singapore’s SMEs has declined due to uncertainties arising from the Covid-19 outbreak. Having begun with the US-China trade war, external facing sectors continue a sustained downward trend, which is compounded in this quarter by disruptions to global supply chains as a result of Covid-19 related circumstances. Domestic facing sectors were also negatively affected by the virus outbreak with the retail/ F&B sector registering the most significant decline in turnover expectations.
Since the business environment is expected to further worsen during the year, it is wise for companies to relook their business strategy and retain their workers to prepare for the eventual recovery.