CPA Australia survey reveals cautious outlook for Hong Kong’s economy in 2024


7th December 2023 – (Hong Kong) According to the latest survey by CPA Australia on Hong Kong’s economic and business outlook, the city’s economy is expected to experience slight growth in 2024. The survey results indicate that anticipated weak demand has led many companies to adopt more conservative strategies and forecasts for the coming year. Additionally, soaring interest rates are anticipated to continue impacting the capital and property markets in Hong Kong.

The survey, which collected responses from 208 accounting and finance professionals based in Hong Kong, revealed that 49% of respondents expect the city’s economy to continue recovering and growing in 2024. Among those respondents, 36% predict growth of less than 3%. To bolster economic growth and enhance international competitiveness, the surveyed professionals suggested that the government implement measures to attract companies and investment (46%) and strengthen policies to attract and retain talent (30%).

Robert Lui, the CPA Australia 2023 Divisional President of Greater China, acknowledged the steady normalization and recovery of Hong Kong’s economic and business activities this year. He highlighted the government’s efforts to attract companies, investment, and talent, which have contributed to Hong Kong’s return to the global stage. However, Lui also emphasized the challenges that lie ahead, including cyclical and structural uncertainties in the global market and geopolitical tensions that may hinder capital flows and investment activities. He advised businesses to exercise caution as these downside risks may constrain economic growth in the coming year.

Regarding specific sectors, nearly two-fifths (39%) of respondents anticipate an increase in funds raised through Hong Kong initial public offerings (IPOs) in 2024. However, high-interest rates and a weaker outlook are expected to impact real estate dynamics, with over half of the respondents forecasting falling property prices next year.

Lui explained that the high-interest rates are exerting pressure on the capital market and property sector. Investor and company sentiment towards new investments and fundraising remains subdued. However, Lui noted that reforms to listing rules, the reduction in stamp duty on stock transfers, and the investment immigration scheme are expected to boost confidence in the capital market and attract investors next year. He acknowledged that rising borrowing costs have adversely affected the global real estate market, including Hong Kong, but highlighted the Hong Kong government’s recent favourable measures aimed at bolstering the property market.

The survey also indicated that respondents have adopted a more cautious approach in their business forecasts. Only 68% of respondents expect their company’s revenue to increase or remain largely the same in 2024, down from 73% in 2023. Weak customer demand emerged as the most pressing challenge for businesses in 2024, surpassing talent shortage, while increasing operational costs ranked as the third largest barrier.

In response to these challenges, many companies are adopting more prudent strategic focuses. Cost management (39%) surpassed innovation and digitalization as the top strategy for 2024, up from 31% in 2023.

Lui emphasised the importance of companies continuing to innovate to cater to evolving consumer behaviour, even in the face of expected weak customer demand. He recommended that companies explore new overseas markets, highlighting that one-third of respondents expect to increase sales and marketing activities outside of Hong Kong next year. Moreover, 39% of respondents plan to expand their business in mainland China within the next three years, while 29% chose Southeast Asia as their intended expansion destination, reflecting a global outlook among Hong Kong businesses.

Lui suggested that the government should enhance efforts to position Hong Kong as a “super value-adder” through increased international collaboration. He also advised Hong Kong businesses to leverage government measures, such as the BUD fund, to build their brands and tap into overseas markets, particularly in ASEAN countries.

Despite the cautious economic outlook, the survey revealed a positive trend in hiring intentions, particularly among smaller companies. Thirty-eight per cent of respondents expect their company’s headcount to increase, up from 31% in 2023. However, most employees are adopting a wait-and-see approach in their careers, with 64% planning to make no changes in their job or seek internal promotions, and only 17% planning to change employers.

Encouragingly, only 13% of respondents stated that their company was not taking any environmental, social, and governance (ESG) actions. Among the ESG practices, diversity, equity, and inclusion (DEI) programs were identified as the most prioritized by companies (28%).

Lui suggested that in the face of fierce talent competition globally, employers must promote DEI to create a sense of belonging and respect to attract and retain talent in Hong Kong. He also recommended that the government take further action to improve the work environment and cultivate an energetic and positive work culture.