- General Chamber of Commerce revises previous estimate from 3.5 to 6.3 per cent, but concerns remain over travel restrictions
- Upgrade is in line with government’s forecast of economic growth between 5.5 and 6.5 per cent
Kathleen Magramo
Published: 5:35pm, 7 Sep, 2021
Hong Kong’s largest business group believes the city’s gross domestic product will grow 6.3 per cent this year, an upgrade of nearly 3 percentage points on its previous prediction.
The General Chamber of Commerce said that improvement hinged on the growth of exports, although some companies remained concerned about prolonged Covid-19 travel closures hindering their operations.
Tuesday’s change in forecast for the city’s GDP was a 2.8 percentage point increase from the group’s prediction of 3.5 per cent last December.
Wilson Chong, the chamber’s senior economist, said the optimistic projection was because the city had kept the coronavirus situation under control, and global demand for goods had also picked up.
“If we can continue to control the [coronavirus] pandemic … and also open the borders as soon as possible, we can have a meaningful economic recovery because currently, the recovery mainly heavily relies on domestic demand,” Chong said.
The upgrade was in line with the government’s revised estimate that the economy could expand between 5.5 per cent and 6.5 per cent this year.
Hong Kong’s GDP grew 7.6 per cent year on year in the second quarter, according to official data released last month, which indicated a decent economic rebound as the city brought the coronavirus under control locally.
The city’s total exports have also rebounded 29.5 per cent in the first seven months of 2021, over the same period last year.
For the first six months of the year, 38 per cent of the 409 respondents polled by the chamber, between July 19 and 23, said their business turnover had increased, while 41 per cent said it remained the same.
The survey also found that some 44 per cent of businesses expected to see a year-on-year increase in turnover for the full year of 2021.
Among those who expect revenues to grow, 16 per cent of respondents expect around 10 per cent of revenue uptick, and 10 per cent projected about 20 per cent growth rates.
However, some businesses were still struggling, as 18 per cent of those polled braced for turnover to fall further by the end of the year. Some 34 per cent of respondents also forecast a decline in revenues compared to pre-pandemic levels.
The poll found that reduced cross-border travel was the biggest challenge businesses face on the road to recovery. Respondents also ranked a reduction in business operations because of social-distancing measures as the second pain point, while the loss of employees and supply chain disruptions were also flagged.
Hong Kong has managed to keep coronavirus infections and deaths to a minimum, but has been slow to reopen its borders.
The General Chamber of Commerce CEO George Leung. Photo: Nora Tam
All but three of the city’s border checkpoints have been shut since February last year, with strict inbound quarantine still in place. As a result, tourism has ground to a halt.
But quarantine-free travel from mainland China and Macau to Hong Kong will resume on Wednesday for city residents, after the scheme was suspended last month.
George Leung Siu-kay, the chamber’s CEO, said businesses had invested in digitalisation to grow their operations, while bringing the pandemic under control helped to improve the business environment.
“At the moment, the question is how can we sustain this optimism?” he said. “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.”