Hong Kong could see a dimmer economic outlook in 2024 amid its long, post-pandemic road towards full recovery, a survey conducted by the the city’s oldest business group has found.
Over 60 per cent enterprises surveyed by the Hong Kong General Chamber of Commerce (HKGCC) said they expect no income growth next year. Among those enterprises, 20 per cent said expected a decrease in income compared to this year, according to the survey.
“The enterprises feel more negatively about the economic outlook next year compared to [how they felt]… about 2023, ” Doris Fung, an economist at the HKGCC said in Cantonese during a press conference on Wednesday.
Patrick Yeung, the CEO of the HKGCC, said the city’s slow recovery should be attributed to the tense geopolitical situation, high interest rates and weak demand globally.
The HKGCC forecasts the city’s growth to be even slower next year with an estimated rate of 2.9 per cent, down from the chamber’s estimated growth of 3.3 per cent in 2023.
In November, the Hong Kong government lowered its GDP growth forecast for 2023 to 3.2 per cent, down from its forecast in August of 4 to 5 per cent.
When asked about business turnover in the first ten month of 2023, only 29 per cent reported an increase in income compared to the same period in 2022, while 39 per cent reported a decrease in income. Thirty-one per cent said their income was “more or less the same. “
Small and median sized enterprises (SMEs) had a tougher year, with 45 per cent reported a decrease in income compared with the first ten months of 2022, when the city was under Covid-19 restrictions.
“It has been a difficult year for SMEs,” Fung, the economist, said.
Looking to the year ahead, 42 per cent of companies surveyed said they expected a decline in business turnover in 2024 compared to the pre-pandemic 2019.
In general, more companies said they felt negatively about business conditions in 2024 compared to last year.
Yeung said the survey was conducted before China’s leader Xi Jinping met US President Joe Biden in the US in mid-November. Talks between the two were hailed by Biden as a “constructive and productive discussion.”
“Should the survey be conducted after the Xi and Biden talk, the results might be more positive,” Yeung said.
Changing consumer habits
Doris Fung, the HKGCC’s economist, said that the city had seen a change in consumer habits in the post-pandemic era, with people spending more money abroad.
The group anticipated that retail sales growth will be slower next year as people will scale back on revenge consumption and with interest rates remaining high.
According to the HKGCC’s estimates, retail sales will grow by 5.3 per cent in 2024, a sharp decrease from the 15.3 per cent growth this year.
Fung said that meanwhile, companies have felt more positively about investing in the Greater Bay Area and other provinces in China, excluding Hong Kong.
A total of 44 per cent enterprises surveyed said they plan to increase their investment in those regions in the coming 12 months, a 10 per cent increase compared to last year’s figures.
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