For Immediate Release
The Hong Kong General Chamber of Commerce (HKGCC) forecasts real economic growth to remain modest at 2-3% in 2016, while inflation is expected to be around 2.5%.
HKGCC’s Senior Economist Rocky Tung said, “Domestic consumption continues to carry Hong Kong’s economy, but the lacklustre global trade flows have been weighing heavily on the city’s economic output. With the weak business environment, the private sector is already showing a weaker appetite for investment.”
Even though the Fed is expected to adjust the interest rate this month, Hong Kong should not be too adversely affected. “Hong Kong’s interest rate should stay low, while any interest rate adjustment in the U.S. is not expected to be too drastic. Moreover, the continuous expansionary monetary policy in Mainland China should keep prices steady. Add to that our full employment situation, then Hong Kong’s overall economic environment should remain stable,” added Tung.
Annual Business Prospects Survey
The Chamber also announced the results of its Annual Business Prospects Survey today, which indicate slow growth momentum for the coming year. For 2016, some 48.4% of survey respondents said that they expect Hong Kong’s economy to grow 0-2%, while 44.2% expect GDP to grow 2-4%. They are slightly more optimistic further down the road, with over half of respondents (55.3%) expecting growth to be over 2% in 2017.
When asked about Hong Kong’s business environment, 66.9% of respondents felt that our competitiveness had deteriorated over the past 12 months. Such perception is a worrying trend. Moreover, there was a very notable decline in the number of respondents saying they were “very satisfied” with the “business environment” (-6.4%), “importation of talent” (-4.6%), and “education/training” (-4.4%).
Our tax regime (64.6%), legal and regulatory system (57%) and free flow of information (49.1%) received the highest ratings. Occupying the bottom of the list was cost of doing business, which was regarded as “very unsatisfactory” by 28.9% of the respondents, compared to 23.8% in last year’s survey. The survey also revealed that many Asian cities have improved their competitiveness. This is particularly true for Singapore, where some 78.2% of all respondents believe that the country is generally more competitive than Hong Kong.
Chamber CEO Shirley Yuen stressed that Hong Kong cannot just continue to plod along business as usual. “Increasing Hong Kong’s competitiveness is no simple task, but is urgently needed, as our competitors are catching up,” she said. “Although our low and simple tax regime remains welcomed by businesses, the introduction of a simple two-tier tax system would boost Hong Kong’s competitiveness and also ease the burden on SMEs.”
A total of 62.5% of respondents said they had adjusted staff pay (61.5% upward and 1% downward) in the last 12 months. Most (40.9%) of the pay rises were below 5%, while only 17.9% of respondents said they increased employees’ base pay by more than 5% in the previous 12 months, a significant decline from 21.4% in 2014.
For 2016, a total of 51.7% and 10.8% of respondents said they plan to increase employees’ base pay by “lower than 5%” and “5-10%,” respectively, compared to 49.2% and 17.8% in 2014’s survey. A sharp reminder of how difficult some businesses are finding the weak economy is clearly seen in the 36.2% respondents who are either not planning to increase staff pay in the next 12 months, or may even have to cut pay.
About the survey
The Chamber’s annual survey was distributed in October of this year. The composition of the 408 respondentsbroadly reflects the Chamber’s membership and Hong Kong’s economy. Trading companies make up 23.9% of the total, followed by financial services (16.4%). Companies operating in Hong Kong for more than 20 years (58.3%) make up the majority.
For more details, please refer to http://www.chamber.org.hk/en/information/surveys_3.aspx
Photo 1: HKGCC’s Senior Economist Rocky Tung, said the findings of HKGCC’s Business Prospects Survey show that the weak global economy, increasing costs and manpower shortages are weighing heavily on businesses’ minds about their prospects for the coming year. HKGCC CEO Shirley Yuen stressed that abolishing the MPF offsetting mechanism would put cash-strapped SMEs under a lot of pressure. She suggested that the Government should conduct an impact assessment study before making any decision.
Photos can be downloaded from http://www.chamber.org.hk/en/media/pressphotos/112/med/BSP2015-3.htm
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