KPMG Financial Performance Index (FPI) Q3 2024

Historic FPI movement of Singapore with respect to Asia and Global trends

Historic FPI movement of Singapore with respect to India, Japan, China, Indonesia, and US

• Infrastructure & Real Estate sector demonstrates robust growth driven by strategic government housing initiatives and sustained commercial demand. The sector's resilience is evidenced by successful affordable housing programs, coupled with the office market's dynamic adaptation to hybrid work models and Singapore's positioning as a technology hub. Additionally, the industrial segment exhibits strong performance metrics, particularly in logistics and warehousing facilities, indicating a well-balanced sector growth trajectory.
• Healthcare sector shows significant recovery, primarily attributed to the revival of international tourism and enhanced regional connectivity. Market performance is notably strengthened by key revenue-generating markets including Mainland China, Indonesia, and Australia, signaling successful market diversification strategies.
• Energy sector exhibits strategic transformation through focused investments in sustainable solutions, including clean energy infrastructure and regional power integration initiatives. Growth projections are underpinned by increasing electricity demand, driven by economic expansion, demographic growth, and the rapidly scaling data center industry, positioning the sector for sustainable long-term development.
• Utilities sector experiences margin pressure amid market challenges, characterised by energy price volatility and intensifying competition. A dominant player in Singapore's electricity and gas market, faces profitability constraints due to escalating energy costs while maintaining strategic investments in grid modernisation and renewable energy infrastructure.
• Trading Companies and Distributors sector shows performance decline, impacted by global trade dynamics and supply chain disruptions. The sector's challenges are amplified by ongoing international trade tensions and residual pandemic-related supply chain constraints, significantly affecting companies focused on cross-border trade operations.
• Technology and Telecommunications sector encounters growth headwinds, stemming from decelerated global tech spending and market competition intensity. Key industry players face revenue growth challenges while balancing competitive pressures with strategic technology investments, particularly in 5G infrastructure development.

• Singapore's economic performance in Q2-Q3 2024 demonstrates remarkable resilience, with GDP growth accelerating from 2.9% to 5.4% in Q3. This growth trajectory is underpinned by controlled inflation metrics, with CPI-All Items at 2.4% and core inflation at 2.1%, alongside a robust labor market showing strong employment growth across both resident and non-resident categories.
• Singapore maintains a strong competitive position among regional peers, outperforming Vietnam, Malaysia, and Thailand. This success is primarily attributed to robust performance in trade-related and modern services clusters, positioning Singapore advantageously in global trade and services demand.
• The government's strategic initiatives demonstrate a comprehensive approach to economic development, focusing on infrastructure projects like Guoco Midtown and Greater Southern Waterfront, enhanced R&D support, and skill development programs. These are complemented by proactive inflation management through monetary policy and targeted subsidies.
• Looking forward, key considerations include potential impacts from the US elections on trade policies and investment flows, with inflation expected to moderate to 1.0%-2.0% in 2025. The continued adjustment of labor market policies to attract and retain skilled workforce, combined with strong economic fundamentals and effective policy measures, positions Singapore favorably for sustained growth despite global challenges.

• Zombies are defined as companies close to default (scoring 0 on the KPMG FPI) for three or more consecutive quarters. These businesses might already be facing challenges or implementing restructuring plans.
• In Asia, the count of zombies has grown each quarter, rising from 173 in 2Q24 to 294 in 3Q24. The leading sectors with the most significant shares of zombies are Infrastructure and Real Estate at 20.6%, followed by Consumer Markets and Technology and Telecommunications both at 13.3%.
• Singapore’s count of zombies similarly increased from 4 to 9 in 3Q24. Sectors reporting zombies are Technology and Telecommunication (2), Infrastructure and Real Estate (1), Trading Companies and Distributors (1), Agriculture and Husbandry (1), Manufacturing (1), Business Services (1), Energy (1) and Media and Entertainment (1).

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