The Worst Is Over, But Challenges Lie Ahead

Businesses in Hong Kong are cautiously optimistic that the worst may be behind them, according to findings by the Hong Kong General Chamber of Commerce (HKGCC) in its latest Business Prospects Survey, with 40% of respondents expecting an increase in turnover in 2023 compared to 2022.

With an equal proportion of respondents anticipating a reduction in business turnover in 2023 compared to pre-pandemic levels, it appears there is still a long way to go before Hong Kong can regain a solid footing. That said, the survey was conducted back in November, before the Government announced the removal of almost all Covid-19 restrictions, so the prevailing sentiment could have since improved.

Restricted cross-border travel was flagged as the biggest concern for businesses regardless of size. This was compounded by the loss of talent, which larger corporations were especially concerned about. For SMEs, social-distancing restrictions at the time of the survey and inflation were cited as the key issues.

After three years of strict Covid restrictions, the reopening of the border and removal of restrictions are extremely welcome for Hong Kong, as an international city and premier business centre. These were the major steps needed to allow the city and the economy to return to normalcy.

This sentiment was reflected by the overwhelming majority of respondents (94%) in the survey, who either agreed (75%) or somewhat agreed (19%) that normalizing cross-border travel with the Mainland and the rest of the world should be the top priority for the SAR Government.

Compared to findings from a similar survey in 2021, businesses indicated they were planning to maintain a steady course on recruitment in Hong Kong over the next 12 months with the proportion of respondents hovering around 34%. However, more than half (55%) of the respondents felt that proposals to attract talent by the Chief Executive in his first Policy Address did not go far enough.

A shortage of skilled workers has made it difficult for those with hiring intentions to find suitable recruits. Unless the issue is addressed properly and effectively, the Chamber believes it will be very difficult to maintain our global competitiveness.

Businesses indicated they would continue to press pause on making new investments in Hong Kong, with only 16% of those polled planning to put up additional capital, more or less, similar to the 17% recorded a year ago.

As Hong Kong is now reopen and reconnecting with the rest of the world, the Chamber believes it’s time to send a strong message to investors that the city remains one of the best places in the world to do business. We also need to do our utmost to showcase our competitive advantages.

The Greater Bay Area (excluding Hong Kong) continued to be a favoured investment destination. For respondents that were already operating in the region, 34% said they would increase capital investment over the next 12 months, compared to 26% planning to expand their presence in the rest of the Mainland.

HKGCC also unveiled its 2023 economic forecast, which predicts real GDP to grow by 3.8% with a headline inflation of 3%.

As Hong Kong fends off challenges brought on by the pandemic, it will still have to contend with other headwinds. These include higher interest rates and weakening global demand, which are expected to suppress household consumption and dampen business spending. The recent rollback in Covid-related restrictions and the resumption of cross-border activities will prove to be the most effective catalyst for the economy to recover quickly.


HKGCC Economic Forecasts 2022 2023
Real GDP Growth -3-3% 3.8%
Headline Inflation 1.9% 3%
Unemployment Rate (year-end) 3.6% 3.3%
Retail Sales Growth 0% 10%
Merchandise Exports Growth -7.7% 4.5%


About the survey

A total of 357 companies responded to the Chamber’s survey conducted from 7-11 November 2022. The largest group of respondents (25%) were professional and business services, followed by traders (15%), and manufacturing (11%).