The OCBC SME Index, a key indicator of the business health and performance of small and medium enterprises (SMEs) in Singapore, expanded to 50.7 in the fourth quarter of 2024. This marks the third consecutive quarter of expansion, signaling a positive trend in the SME sector. The index, which uses transaction data from 100,000 SME customers of OCBC with an annual sales turnover of up to S$30 million, registered broad-based improvements across all industries, with the exception of Healthcare and Education, which were possibly seasonal.

The expansion of the OCBC SME Index in Q4 2024 was primarily driven by two key factors. Firstly, the recovery in global electronics demand and manufacturing output in the second half of the year led to broad-based improvements across all industries. This recovery was particularly notable in the electronics and transport engineering sectors, which contributed to the overall growth of the manufacturing sector. Secondly, trade-related industries, particularly Transport & Logistics and Wholesale Trade, supported the health of SMEs during this period. The robust performance of these sectors, coupled with the resilience in external demand led by the ongoing tech and electronics upcycle, contributed to the overall expansion of the SME sector.



The positive performance of SMEs in Singapore is further validated by the overall growth of the Singapore economy. In 2024, the economy grew by 4.0%, accelerating from 1.1% growth in 2023. This growth was supported by the services and construction sectors, which include the trade-related industries mentioned above. The wholesale and retail trade, along with the transportation and storage sectors, grew by 5.6% year-on-year (YoY) in Q4 2024, continuing the 5.2% growth seen in the previous quarter. This growth contributed to the overall SME health and expansion, as reflected in the OCBC SME Index.

In the 4Q 2024 OCBC SME Business Outlook poll, nearly half (48%) of the nearly 1,000 respondents surveyed expected business to perform better over the next six months. Over a third (37%) expected their performance to remain the same, while nearly 20% named business expansion as their top priority in 2025, with half planning to grow their businesses overseas. Another 20% planned to improve their businesses by launching new products and services or scaling their digital capabilities. However, over 1 in 10 (15%) expected a weaker first half in 2025, mainly from domestic industries.

The improved health of SMEs in Singapore, as indicated by the OCBC SME Index, is a positive sign for the overall economy. The recovery in global electronics demand and manufacturing output, coupled with the strong performance of trade-related industries, has contributed to the expansion of the SME sector. As the economy continues to grow and SMEs adapt to the changing business environment, it is expected that the OCBC SME Index will remain in the expansionary range in 2025.