CPA Australia: Confidence improves but uncertainty weighs on Hong Kong’s economic outlook

HONG KONG SAR – Media OutReach – 7 December 2021 – Hong Kong’s economic outlook has improved and is in
line for modest growth next year, according to a new survey by one of the
world’s largest professional accounting organisations, CPA Australia.

(from left to right) Mr Peter Lee, Divisional President 2013 of CPA Australia in Greater China; Mr Eden Wong, Divisional Deputy President 2021 of CPA Australia in Greater China; Mr Janssen Chan, Divisional President 2021 of CPA Australia in Greater China; Mr Anthony Lau, Divisional President 2020 of CPA Australia in Greater China

CPA Australia surveyed 214 Hong Kong-based
accounting and finance professionals about the local economy. Sixty-seven per cent of respondents indicated they expect
Hong Kong’s GDP to grow in 2022. Of those, 52 per cent expect the economy to
grow by up to 2.9 per cent, while 15 per cent believe it will grow by 3 per
cent or more during the year.

Janssen Chan FCPA (Aust.) CPA Australia Divisional President of Greater
China said, “Measures to combat the pandemic and stimulate the local economy, such as
the consumption voucher scheme, have bolstered the city’s economic recovery and
prospects. Most respondents are cautiously optimistic about Hong Kong’s economic
outlook and think the economy will grow at a modest pace.

“However, restrictions on cross-boundary travel and the
pandemic remain the top barriers to economic growth nominated by respondents. Despite improvements in overall
business and economic sentiment, we should be mindful of the risk of an unequal
economic recovery among different industries and the ongoing challenges posed
by COVID, such as the emergence of the Omicron variant.”

Fifty-three per cent of respondents predict their company’s revenue will
increase next year, with 47 per cent expecting revenue growth of up to 29 per cent. Reflecting a more positive outlook, 36 per cent of
respondents report their company will increase staff count in 2022, up from 13
per cent in 2021. Fifty-nine per cent of respondents expect their salary to
increase in 2022, compared to only 15 per cent in 2021.

Chan observed, “The survey findings indicate that business confidence in Hong Kong has
improved over the past 12 months. Last year, only 26 per cent of respondents expected
their company’s revenue to increase in 2021. In contrast, reflecting a
better-than-expected recovery, 50 per cent of respondents said revenue will grow
this year.

Meanwhile, 78 per cent of respondents expect their company to expand its
business activities outside of Hong Kong in the next three years, with Mainland China being
the top destination of choice followed by Southeast Asia.

“Strong intentions to expand business
activities into other markets is another sign of economic recovery. As an
international city, expanding Hong Kong’s economic and trade connections will help
accelerate the city’s economic recovery and enhance its competitiveness.

“China recently upgraded its ties with ASEAN
to a comprehensive strategic partnership. With ASEAN being Hong Kong’s second largest
trading partner, companies in Hong Kong will be eager to seize the markets
opportunities from ASEAN economies as well as greater connectivity with other
parts of the Greater Bay Area (GBA).”

Six in ten survey respondents think
strengthening Hong Kong’s position as an international financial centre will
improve the city’s international competitiveness. When asked what measures are
needed to achieve this, most respondents chose supporting FinTech and other
digital finance innovation, followed by Hong Kong’s status as an offshore
renminbi (RMB) centre and attracting and retaining finance talent.

Chan commented, “Greater cooperation with
Qianhai to expand the scope of Hong Kong’s offshore RMB product offering will
bolster Hong Kong’s position as a leading offshore RMB centre. We also expect the
financial integration schemes launched in the GBA this year to boost economic
growth in 2022.

The ambiguous timetable for resuming
cross-boundary travel and risks of further COVID-19 outbreaks continue to weigh
on economic sentiment. Chan
said, “While Hong Kong’s economy is recovering, challenges such as the
emergence of the Omicron variant continue to present significant uncertainty.
Businesses should keep focusing on innovation and technology including digital
transformation, attracting, nurturing and retaining talent, and improving business
efficiency in 2022 to adapt and thrive in this volatile environment.”

Chan suggested that the government may wish to
consider several initiatives to support Hong Kong’s economic growth in 2022.

“One option to support Hong Kong businesses is
developing a roadmap to resume cross-boundary travel with fewer restrictions with
Mainland China and some ASEAN countries. Other possible initiatives include allocating
additional resources to the Branding, Upgrading and Domestic Sales (BUD) Fund
and the SME Export Marketing Fund, and signing more free trade agreements and comprehensive
double taxation agreements with other economies.”

“Further, we
believe the government should consider promoting green and sustainable finance by
introducing incentives and regulatory reforms to encourage financial
institutions to expand their offerings of green and sustainable funding options,
as well as offering more RMB-denominated green financial products.”