Business optimism in Hong Kong has been on a steady rise for the third consecutive quarter, according to the latest Grant Thornton International Business Report (IBR).
Hong Kong business optimism has seen a rise to net 28% in Q4 from 12% in Q3, showing confidence in economic recovery in 2013.
Global business optimism has continued to fall to net 4% in Q4 from 23% in the earlier half of 2012 (Q2).
This has been largely driven by a huge fall in the world’s largest economy, the United States (from 50% in Q2 to -4% in Q4).
Although uncertainties are still looming on global economy after the US fiscal cliff deal and the sovereign debt crisis in the eurozone, the IBR shows a very different picture in the emerging markets. Mainland Chinese business optimism is on the steady rise from 19% in Q4 from a slowdown in Q3 (11%).
The Latin America remained relatively stable over the last quarter, and actually increased to 69% in Q4, up from 64% in Q3.
The BRIC economies (29% to 39%) also remained consistently optimistic, while Asia Pacific (excl. Japan) has seen a rise from 20% to 28% over the same period.
Daniel Lin, managing partner at Grant Thornton Hong Kong, said: “After the US election and the change of leadership in China, businesses in Hong Kong and the wider Asia have a better and clearer picture of the challenges ahead in 2013. More, Hong Kong GDP growth has been forecasted to double to around 3% in 2013, which goes in line with our IBR results of improving business optimism.”
“I’m certainly glad to see business remain confident to the future; however, as Hong Kong is such an outward-oriented economy, businesses should keep on being more prudent when making hiring and investment decisions.”
Top priorities for Hong Kong businesses
The latest IBR reveals that businesses in Hong Kong are expecting to spend more on R&D in the coming year with a +10% increase from last quarter (14% in Q3 vs. 24% in Q4).
“Investing in R&D will benefit businesses in the long run - this is especially important when the economy is recovering from the downturn,” adds Lin. “The IBR indicates an improving optimism among businesses in the BRIC & Asia Pacific (excl. Japan) regions, which may mean growing level of foreign direct investment and M&A deals. It’s therefore paramount that businesses sharpen their competitive advantage and prepare for the opportunities ahead.”
The IBR also shows that 82% of business leaders are expecting to offer their employees a pay rise in the next 12 months, signalling a strong intent that businesses are looking to keep their best people and stay competitive.
“As uncertainties still cloud around the world’s economy, business may be in a ‘wait and see’ approach. However, I would urge owners not to lose sight of their long term growth objectives. Businesses that are able to lock in their best talents and invest will be first out of the gate in a recovery and are likely to find themselves ahead of the competition,” says Lin.