Businesses Cautiously Optimistic Amid Mild Improvement

Business confidence appears to be improving, according to the findings of the Hong Kong General Chamber of Commerce’s (HKGCC) survey, which showed 44% of respondents expect their business turnover to increase for the full year in 2021 over last year. 

For the first six months of 2021, 38% of the 409 respondents said that their business turnover had increased, while 41% said it had remained the same.

Chamber CEO George Leung said the results show that businesses are more optimistic due to an improving operating environment, Covid-19 being largely brought under control in Hong Kong, and more companies investing in digitalization of their business. 

“Notwithstanding such positive sentiments by almost half of respondents, 18% of those polled said they are bracing for business turnover to fall further by the end of the year while 34% are forecasting a decline compared to pre-pandemic levels,” said Leung.

The biggest impediment facing businesses was reduced cross-border travel, followed by scaled back business activities due to social-distancing measures, brain drain was ranked third, and supply chain disruptions in fourth place. 

“With vaccination rates increasing and Hong Kong’s robust track and trace system working well, we have been urging the Government to start gradually easing travel restrictions as this is even more disruptive than social-distancing measures,” he added.

The survey showed that small and medium sized enterprises were less optimistic than large companies, as 23% of SMEs expect business to improve by the end of 2021 compared to pre-pandemic levels, significantly less than 37% for large companies. 

“More supportive measures will be needed to promote digitalization to help SMEs. This is borne out by the survey’s findings, as 27% of SMEs cited the lack of financial resources as the key factor for their lack of investment in technological capabilities compared to 16% for their larger counterparts,” said Leung. 

As the streak of zero local cases continues and the vaccination rate increases, HKGCC is cautiously optimistic that the economy will continue to improve, growing 6.3% in for the full 2021, an improvement of 2.8 percentage points compared to its forecast in December 2020. 

“At the moment, the question is how can we sustain this optimism? The return to normalcy will be heavily dependent on a number of factors. These include Hong Kong’s ability to reopen borders, mapping out a post-pandemic strategy to phase out social restrictions, and maintaining a stable operating environment,” concluded Leung. 

About the survey

A total of 409 companies responded to the Chamber’s survey conducted from 19-23 July 2021. Respondents’ profiles reflect, more or less, Hong Kong’s economic composition. The largest group of respondents (23%) comprised those from the professional and business services, followed by traders 17%, and financial services 12%.

Charts from the survey and economic forecasts can be downloaded here.