Findings from the National Business Survey 2025 – Annual Business Sentiments Edition released by the Singapore Business Federation has revealed that overall business confidence – measured by the Business Sentiment Index (BSI) – declined from 55.4 in Q2 2025 to 52.2 in Q3 2025.
Sentiment toward Singapore’s economic outlook over the next 12 months also remains cautious, with 37% of companies expecting the economy to worsen compared to only 14% anticipating improvement, underscoring the need for continued vigilance and adaptability among businesses.
Top business concerns amid uncertain profitability outlook
Manpower cost (63%), customer demand uncertainty (44%), and rental cost (40%) remain the top three business challenges in 2025, findings consistent with previous year.
Notably, cybersecurity and data-privacy risks have grown in prominence, rising to 36% and displacing foreign workforce policies from the top five concerns. Businesses in HRA, Banking & Insurance, and Other Financial & Insurance Activities report the highest levels of concern over cybersecurity vulnerabilities.
The challenges also vary significantly by sector. Availability of manpower is cited as having the highest impact on HRA as well as Health & Social Services, while foreign workforce policies are most acutely felt by Construction & Civil Engineering and HRA firms.
Retail Trade businesses report the greatest concern with educating employees on adapting to new technology (48%), whereas Banking & Insurance companies are most worried about employees’ skill levels (44%), highlighting ongoing pressures around talent development and workforce readiness.
Outlook on profitability remains under strain, with only 4% of businesses reporting an increase over the past year compared to 34% that experienced a decline. Rising manpower, rental, and logistics costs continue to be the top three contributors to this squeeze.
SMEs cited utilities among their top five cost increases, while large companies consider raw material price volatility among their highest-impact cost drivers.
Shifting priorities amid uncertainty and charting the way forward
In view of current uncertainties, businesses are prioritising increasing employees’ salaries (39%), investments in new technologies (33%), and expansion into overseas markets (30%) for the next 12 months. Compared to the last 12 months, the strongest increases in intention are observed in expanding into overseas markets (+11%), re-engineering business processes (+8%), and diversifying supply chains (+7%). These shifts underline companies’ efforts to future-proof operations against rising costs, volatile demand, and operational risks.
Looking ahead, businesses have identified revenue growth (65%) and ensuring positive cash flow (49%) as top priorities for the next 12 months, consistent with their focus in 2024.
However, finding new business opportunities and maintaining revenue levels have overtaken talent-related priorities such as attracting or retaining employees and training staff. This shift underscores the heightened importance placed on commercial resilience and market expansion amid a more demanding business environment.
Calls for support ahead of Singapore Budget 2026
As the government prepares for Budget 2026, businesses have identified schemes to manage rising costs (63%), support the attraction and development of the local workforce (46%), and improve cash flow (42%) as their top three requests.
Companies also hope for stronger support in capability development, particularly in areas that enhance business resilience, including strategy development (34%) and financial robustness (28%) as well as in strengthening human capital (31%) to meet the challenges of a fast-evolving economic landscape.
