Sellers fear the risk of buyers defaulting on payments.
The HSBC Global Connections report said:
According to the HSBC Trade Confidence Index, Singaporean traders are less optimistic today than they were six months ago with scores dropping from their second highest level of 115 to 104.
Even with this, the general viewpoint remains positive as 74% of businesses surveyed say they expect trade volumes to remain at current levels or increase over the course of the next six months.
This is not the case in terms of the global economy, where 70% anticipate a decrease and only 5% foresee an upswing.
Importers and exporters appear to be split on their outlooks, however. Buyers in Singapore have confidence that their overseas suppliers will deliver, with only 13% indicating they expect an increase in trade agreements not being honoured.
Twenty-one percent of Singaporean sellers, on the other hand, believe the risk of their buyers defaulting on payments will increase in the next six month.
This is up from 13% in H1 2012, and to protect themselves they are becoming less flexible by limiting credit amounts and requesting advance payment. In addition, they intend to use traditional trade finance products to further minimise risk.
International businesses in Singapore cite their main barriers to growth as fluctuating exchange rates (54%), insufficient margins (46%) and lack of demand (49%).
The various sub-regions in Asia remain Singapore’s top trading partners and close to one-third of respondents say they will continue looking to one or more parts of Asia for future growth.
The US and the UK have both become less significant in recent months with nearly 50% fewer Singaporean traders doing business in the two countries.
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