SMEs ‘cautiously optimistic’ about Q3 2022 as business confidence takes a hit: ASSOCHAM-D&B report

MUMBAI: Small and medium businesses in India are cautiously optimistic about their business performance for Q3 2022, says the latest report of ASSOCHAM-Dun & Bradstreet Small Business Confidence Index (ASSOCHAM-D&B SBCI).

The index, which measures the level of optimism of small and medium businesses on key business parameters such as sales, employment, prices, inventory, and investment, stood at 83 in Q3 2022, down from 87 in Q2 2022. An index value above 50 signals an improvement or increase in the upcoming quarter compared to the same quarter in the previous year.

While the RBI has been tightening the monetary policy compelled by inflation, SMEs do not find any concern with regard to availability of credit. ”Good thing is that the latest RBI credit policy statement gave an assurance that enough liquidity would remain in the system,” ASSOCHAM Secretary General Deepak Sood said.

Sood added that it is up to the large companies both in the private and public sector to ensure that their SME vendors are paid well in time so that the payment and receipts cycle remains smooth and seamless.

Most indicators point to a challenging economic environment for Q3 2022. 52% of SMEs surveyed anticipate a rise in export orders in Q3 2022, compared to 86% in Q2 2022, indicating a slowdown in export-driven demand growth.

“This sharp fall in optimism about export orders reflects the downward revision for global economic growth due to inflationary pressures, rising interest rates and the impact of the Russia-Ukraine war. Since March 2022, when we last conducted this survey, over 70% of the economies tracked by the Bank for International Settlements have increased their policy rates. Inflation has reached multi-decade highs in several major economies including the US, UK, Germany, France, and Canada. Exports may also be negatively impacted as more companies shorten their supply chains and diversify suppliers to reduce their operational risks,” said Avinash Gupta, Managing Director & CEO – India, Dun & Bradstreet.

The percentage of SMEs that expect an increase in their workforce declined to 72% in Q3 2022 from 76% in Q2 2022. Businesses anticipate that price pressures will continue to intensify in Q3 2022. 80% of SMEs anticipate an increase in the cost of raw materials, while only 74% of SMEs anticipate an increase in their selling prices. This suggests that not all producers may be able to pass on the greater cost of raw materials to customers. Consequently, the percentage of SMEs anticipating an increase in their net profits was 74%, a slight decrease from the 77% recorded in Q2 2022.

80% of SMEs anticipate an increase in domestic orders, up from 75% in Q2 2022. Consequently, the percentage of responding SMEs that are anticipating an increase in their net sales rose to 79% from 77% in Q2 2022. Businesses intend to improve their average capacity utilisation rate to 60% in Q3 2022, up from 55% in Q2 2022. 75% of SMEs anticipate an increase in their new fixed capital investment, which is suggestive of optimism over future demand, but this is marginally lower than the 77% recorded in Q2 2022.

ETRise MSME Day 2022 Mega Conclave with Industry Leaders. Watch Now.

Source link

We will be happy to hear your thoughts

Leave a reply