For Immediate Release
The Hong Kong General Chamber of Commerce forecasts real economic growth next year to be in the 1 – 2% range over 2016, while inflation will remain contained at 2.5 – 3%.
The Chamber’s Senior Economist Rocky Tung said there are concerns about economic uncertainties in key markets, including Mainland China, Europe and the United States, while competition within the region is becoming sharper. “External uncertainties, including the anticipation of a faster pace of Fed rate hikes and the potential rise of protectionism in key markets, are still clouding Hong Kong’s economy. Together with other tourism destinations’ rising efforts to woo more tourists, the recent strength of the Hong Kong dollar may deter visitors and cutback visitors’ spending in the near term,” he said. “Nevertheless, given the tight labour supply, the domestic labour market will remain relatively stable, which should allow domestic consumption to have a positive contribution on GDP growth.”
The results of the Chamber’s Business Prospects Survey also point to weak growth for the coming year. The overwhelming majority (65%) of respondents believe that Hong Kong’s growth will be just 0-2% in the coming year (see Chart 1), while 29% of respondents expect growth to be in the 2-4% range.
“The findings also highlighted a worrying message that our competitiveness was again perceived to have deteriorated by a large percentage of the respondents. In the survey, 73% of the respondents said they felt Hong Kong’s competitiveness had deteriorated over the past 12 months, up six percentage points from 2015, to continue the steady climb from the 42% in 2011,” said Tung.
Commenting on the findings, Chamber CEO Shirley Yuen said, “The fact that nearly three-quarters of business owners feel Hong Kong’s competitiveness has declined in the past year should serve as a sharp wake-up call for all of us on the need for urgent improvement. In 2011, the key concerns were economic and external, as the world was still reeling from the financial crisis of 2008. In 2016, we have had more political and internal concerns, which unnecessarily diverted our attention and energy away from focusing on the business environment, improving our competitiveness, expanding our skills and talent pool, and looking at longer term planning for Hong Kong’s future development. We urgently need to refocus on these key issues.”
The survey, which was conducted in September and October this year, identified longer-term Government planning (82% of respondents), cost of doing business (77%), and political development or sentiment (76%) among the key issues that will impact our competitiveness in the next three to five years.
Given businesses’ concerns, respondents to the survey naturally adopted a more conservative approach towards investment and hiring in 2017. In terms of investment plans, 53% said they were not planning to invest in 2017, while 6% said they would likely cut investment. Similarly, over half (56%) of the respondents said that they were going to freeze hiring (49%) or cut jobs (8%) in the next 12 months. On a slightly more positive note, 41% said they would invest further and 44% said that they were planning to hire more staff in the next 12 months.
About the survey. The Hong Kong General Chamber of Commerce’s Annual Business Prospects Survey was conducted in September and October. A total of 354 questionnaires were returned.
Media inquiries: Please contact Ms Elaine Chan at 2823 1250 / [email protected]