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The number of firms in the manufacturing and service sectors that believe business conditions will worsen over the next six months has dropped from January.
But instead of expecting things to improve, most companies predict that the situation will stay pretty much the same, according to surveys by the Economic Development Board (EDB) and the Singapore Department of Statistics (DOS).
These polls, conducted quarterly among almost 1,800 companies, indicate that business confidence appears to be stabilising amid tentative signs that the worst of the recession is over.
But the outbreak of swine flu could cause confidence to slide again, said the Singapore Chinese Chamber of Commerce and Industry (SCCCI) and business organisations yesterday.
'At this stage, it is too early to tell whether businesses will become more pessimistic,' said Mr Lawrence Leow, president of the Association of Small and Medium Enterprises.
'But the outbreak is worrying and should it become more widespread, affecting countries in Asia, businesses will have to adjust downwards their expectations and prospects.'
A spokesman for the SCCCI said that while the outlook is 'still anything but salubrious', companies 'were hoping to see some improvement in the second half of this year'. But now, local enterprises have been 'dealt another blow with news of the swine flu outbreak'.
With the latest health scare rumoured to be even more deadly than Sars, 'we are faced with even greater uncertainties than before'.
Whether business expectations here will turn south again depends on 'how the outbreak pans out in the countries affected', said Singapore Business Federation's chief executive officer Teng Theng Dar.
'A crisis more severe than Sars in 2003 would impact Singapore, even if the outbreak does not manifest itself here. Exports will be hit, and so will tourist arrivals to Singapore from countries affected by the crisis.'
The tourism and travel industries will be among the worst hit if swine flu takes hold here, said the business organisations.
It would be a big blow for the hotel sector, which turned more positive in the recent survey.
In January, not a single hotel expected the outlook to improve over the next six months, but according to the survey results released yesterday, 11 per cent predicted a pick-up in business.
For services firms in general, 53 per cent expect business conditions to worsen, a slight improvement from the 58 per cent in January, according to DOS.
Although most segments within the service sector showed more optimism, companies dealing with real estate and business services stood out as being more pessimistic.
The private property market saw its biggest price drop in the first quarter of the year and appears set to keep falling.
As for manufacturing, about 40 per cent of firms expect the situation to deteriorate, compared to 63 per cent in January, said the EDB. But more than half think conditions will stay the same, with only 7 per cent predicting that things will improve.
The biggest improvement in optimism comes from the electronics, chemicals, precision engineering and general manufacturing industries. But the outlook has dipped for pharmaceutical and transport engineering firms, said the EDB.
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