Amid the shifting global economic and political climate, businesses in Hong Kong are cautiously optimistic about their prospects for 2025. The Chamber’s latest Business Prospects Survey shows that 31.1% of respondents expect a growth in turnover in 2025 compared to 2024.
However, Hong Kong's post-pandemic recovery has proven more challenging than expected. In the first 10 months of 2024, 39.8% of respondents reported a decline in business turnover compared to the previous year. Conversely, only 29.2% noted an improvement in performance, while 31% indicated no significant change.
Looking ahead, economic headwinds are likely to persist. Although 31.1% of respondents foresee a rise in business turnover in 2025, a notable 46.1% believe their performance has not yet fully rebounded to pre-pandemic levels and may continue to lag.
It is important to consider that this survey was conducted in mid-November, shortly after the U.S. presidential election. The resurgence of uncertainties in U.S.-Sino relations and the new Trump administration have clearly influenced business sentiment.
In its December 2024 economic outlook report, the Organisation for Economic and Cooperation and Development projected a slight increase in global economic growth from 3.2% in 2024 to 3.3% in 2025. Although the global economy shows resilience, the outlook remains cautious. Geopolitical tensions, particularly the potential for a trade war with Trump's return to the White House, have raised significant concerns among businesses about the potential negative impact of external risks.
On the domestic front, it is encouraging that brain drain – previously a major challenge for businesses – has somewhat eased due to the government's talent attraction measures. Over a quarter (26%) of respondents plan to hire more staff over the next 12 months, a decrease from 30.5% last year. Nearly half (49.8%) intend to maintain their current headcount, while 17.4% indicated plans to reduce their workforce.
Regarding investment, companies are adopting a wait-and-see approach toward their capital plans in Hong Kong due to rising uncertainty. 61.2% of respondents expect their investment levels in the city to remain unchanged in the coming months. Only 15.8% of surveyed large enterprises plan to increase their capital, down from 31.7% last year.
Looking beyond Hong Kong, companies remain optimistic about investing in the Greater Bay Area (excluding Hong Kong) and the Mainland. Thanks to the HKSAR Government's initiatives to strengthen connections with ASEAN and the Middle East, there is a notable surge in interest in these emerging markets. Nearly 80% of respondents plan to increase or sustain their investment levels in ASEAN, a significant rise from last year's 63.1%. Similarly, sentiment towards Middle Eastern markets is positive, with 75% of respondents intending to increase or maintain their investment levels, up from 54.8% last year.
Amid the shifting global economic and political landscape, business diversification has become a crucial strategy for sustained growth, with 53.9% of respondents actively considering this approach. Among them, 63.6% plan to explore new markets, while 61% aim to expand their product and service offerings. However, limited resources and high costs remain significant obstacles to diversification efforts.
In terms of operational efficiency, more than half of the respondents are currently leveraging AI to some extent. Yet, a skills gap within the workforce presents a notable hurdle to widespread AI adoption. Targeted measures should be considered to support future growth for companies.
In 2024, we successfully navigated one of the most significant election years in history. However, this does not ensure a surprise-free 2025. Drawing from past experiences, businesses must prepare for the unexpected. Diversifying operations and effectively utilizing technology will enhance resilience amid increasing uncertainties.
About the survey
The annual Business Prospects Survey was conducted from 12 – 26 November 2024 and received a total of 219 valid responses. The largest group of respondents were professional and business services (28.8%), followed by traders (19.2%) and financial services (10%).
Announcing Results of the Business Prospects Survey 2024
Chamber Chairman Agnes Chan, CEO Patrick Yeung and Economist Doris Fung revealed the findings of the Chamber’s Business Prospects Survey to the media on 12 December, shedding light on what’s ahead for businesses in the coming year.
Doris Fung, dfung@chamber.org.hk