Hong Kong may face a challenging economic outlook in 2024, as more than 60% of companies surveyed expect no growth, according to a recent study conducted by the Hong Kong General Chamber of Commerce (HKGCC). The city’s oldest business group found that a significant portion of enterprises surveyed anticipate stagnant or declining income next year.
Doris Fung, an economist at the HKGCC, highlighted the negative sentiment among these enterprises during a press conference, stating that they are more pessimistic about the economic outlook for 2024 compared to their views on 2023. This dim outlook can be attributed to several factors, including the ongoing tense geopolitical situation, high interest rates, and weak global demand, as cited by Patrick Yeung, the CEO of the HKGCC.
The HKGCC predicts an even slower growth rate for Hong Kong in 2024, with an estimated rate of 2.9%, down from the chamber’s earlier projection of 3.3% for 2023. This adjustment aligns with the Hong Kong government’s recent reduction in its GDP growth forecast for 2023, from 4-5% to 3.2%.
Notably, the first ten months of 2023 presented a mixed picture for businesses in Hong Kong. Only 29% reported an increase in income compared to the same period in 2022, while 39% experienced a decrease. Thirty-one percent reported income levels remaining relatively stable. The impact of the Covid-19 pandemic was particularly pronounced for small and medium-sized enterprises (SMEs), with 45% of them reporting a drop in income during this period.
Looking ahead, 42% of the companies surveyed anticipate a decline in business turnover in 2024 compared to pre-pandemic levels in 2019. The overall sentiment toward business conditions for the upcoming year is more negative compared to the previous year.
The survey was conducted before the meeting between China’s leader, Xi Jinping, and US President Joe Biden in mid-November. Patrick Yeung suggested that if the survey had taken place after the meeting, the results might have been more positive.
The HKGCC’s economist, Doris Fung, also highlighted changes in consumer habits in the post-pandemic era, emphasizing increased spending overseas. As a result, the HKGCC anticipates slower retail sales growth in 2024, projecting a rate of 5.3%, substantially lower than the 15.3% growth witnessed this year. Fung attributed this slowdown to reduced revenge consumption and high interest rates.
Despite the challenging circumstances, some companies expressed a brighter outlook for investing in mainland China. According to the survey, 44% of the enterprises plan to increase their investments in the Greater Bay Area and other Chinese provinces, excluding China itself, over the next 12 months. This figure represents a 10% increase compared to the previous year’s survey.
As Hong Kong continues its long journey toward post-pandemic recovery, these findings shed light on the concerns and expectations of businesses operating in the city. The uncertain geopolitical landscape, along with other economic factors, has contributed to a less optimistic outlook for 2024. However, the survey was conducted before significant developments in international relations, leaving room for potentially more positive outcomes in the future. Both businesses and the wider community will be closely monitoring the evolving economic situation in the coming year.
Keywords: Hong Kong, economic outlook, survey, Hong Kong General Chamber of Commerce, enterprises, growth, income, pandemic, recovery, geopolitical situation, interest rates, weak demand, GDP growth forecast, consumer habits, retail sales growth, mainland China, investments
