SINGAPORE, April 22 (Xinhua) -- Singapore's small and medium-sized enterprise (SME) activity remained resilient in the first quarter of 2026, though business sentiment is turning cautious as geopolitical tensions in the Middle East raise cost pressures and cloud the outlook, according to a report by OCBC Bank on Wednesday.
The OCBC SME Index, which tracks business health and performance, rose to 51.6 in the first quarter from 50.8 in the preceding quarter, signaling continued expansion.
Despite the higher index reading, the share of respondents reporting improvements fell by six percentage points, suggesting underlying momentum may be easing.
Looking ahead, nearly one in four respondents (22 percent) expect conditions to worsen over the next six months, up seven percentage points from the previous quarter. This indicates a weakening in business sentiment, with SME owners becoming more pessimistic about near-term conditions.
"Amidst heightened tensions in the Middle East, geopolitical uncertainty emerged as the top challenge for SMEs in the near-term, particularly among outward-oriented industries," said OCBC.
Higher energy prices and freight rates could lengthen delivery times and disrupt supply chains, potentially eroding the competitiveness of SMEs that are reliant on the external economy, it added. ■