Business Prospects Survey 2002
ANOTHER DIFFICULT YEAR AHEAD

Hong Kong's business community is expecting another difficult year in 2003, but there should be a marked improvement in 2004, according to the findings of The Hong Kong General Chamber of Commerce's fifth annual Business Prospects Survey. The Chamber's own forecast for 2003 will be presented at our 9th Annual Hong Kong Business Summit on Wednesday, 27 November, 2002.

Despite the modest economic recovery apparent from the second quarter of 2002, survey respondents were cautious about the prospects for the economy and overall business conditions in the coming year.

Most survey respondents (41.9 per cent of the total) expect Hong Kong's economic growth in 2003 will be about the same as in 2002, although a substantial proportion (36.5 per cent) expect the economy will be weaker than in 2002.

Only 6.7 per cent expect the economy will be much weaker. A further 14.3 per cent forecast it will be stronger and only 0.6 per cent that it will be much stronger.

For 2004, however, the picture changes markedly, with 42.3 per cent of respondents expecting the economy to be stronger and 2.3 per cent much stronger.

However, 29.3 per cent think the economy will remain about the same, 20.4 per cent think it will be weaker and 5.5 per cent expect it to be much weaker.

The Chamber's fifth annual Business Prospects Survey was conducted in October this year and contained 41 questions in seven sections. These covered the outlook for economic and business conditions, Hong Kong's competitiveness, the Government's role, Mainland economic relations, and background information of the respondents.

There were 361 valid responses received. The Survey has been conducted every year since 1998.

"Continuing global uncertainties, weak domestic demand and investment, ongoing deflation and high unemployment have clearly made the local business community cautious about the immediate future," Chamber CEO Eden Woon said.

"The outlook for 2004 is, however, much stronger," he said.   "We were also pleased with the strong backing from business for such initiatives as CEPA and PRD integration".

Dr Woon said the findings of the survey in terms of the economic outlook and local business conditions suggested there was much work that needed to be done to restore confidence in the local economic outlook.

"However, it is positive that business expects both the general economic outlook and business conditions to improve in 2004 after another difficult year in 2003," he said.

Dr Woon said the survey revealed overwhelming support for the negotiation of a Closer Economic Partnership Arrangement (CEPA) between the Hong Kong SAR and the Mainland, with 84 per cent viewing it positively, only 6.2 per cent negatively and 9.8 per cent saying it would have no change.

He said there was also overwhelming support for closer economic integration between the Hong Kong SAR and the rest of the Pearl River Delta (PRD), with 88.8 per cent viewing it positively, 6.2 per cent negatively and 5.1 per cent seeing no change.

"In pursuing greater PRD integration, respondents think the most urgent tasks include better infrastructure links (69.3 per cent), more co-ordinated planning (64.5 per cent) between the two sides and improved border crossing facilities (64.5 per cent), he said.

"Others included overcoming bureaucratic delays (57.6 per cent), more specific strategies for development (55.1 per cent), 24-hour border crossing (48.5 per cent) and more forceful promotion of the PRD concept (28.3 per cent)."

"The Chamber would like to see the Government move ahead quickly to make both CEPA and greater co-operation and economic integration within the PRD a reality in the near term future," Dr Woon said.

"Progress on these two fronts would not only be positive for the Hong Kong SAR's economic growth, but would give a much needed boost to local confidence and help enhance the SAR's role in the immediate region," he said.

For further information, contact: Dr Eden Woon, Chamber CEO, 2823-1211