Small and medium‐sized enterprises(SMEs) expect business outlook to brighten in the second and third quarters of this year as global economic conditions improve, but do not think this will translate into higher sales and profit as domestic concerns weigh in.

This was a finding in the latest survey by the Singapore Business Federation (SBF) and DP Information Group (DP Info), which delved into the sentiment of 3,000 business owners and managers for Q2 and Q3.

It found that SMEs' overall outlook rose three points to 55 from the previous survey released in January, which looked at sentiment for Q1 and Q2.

The improved reading comes as the US shows signs of recovery, Europe battles through its problems and China rebounds with slower growth.

Despite the raised optimism, SMEs lowered their expectations for their financial performance. The index score for turnover expectations fell to 5.36 from 5.44; profit expectations fell to 5.12 from 5.33.

Ho Meng Kit, CEO of SBF, said: "Inflation, high business costs and (the)  tightened foreign worker policy continue to be a drag on businesses and the economy.

Another reason SMEs do not think they will perform better may be because they are not feeling the benefits of a slightly more stable global outlook.

Capital investment expectations among SMEs rose to 5.23 from 5.16 despite the dimmer profit outlook,suggesting that SMEs understand they need to make productivity improvements now,said Ms Chen.

Source: AmFraser