HK's white collar workers have a dim view of 2016 ·CNBC
Saheli Roy Choudhury
Updated
Political tension with Beijing, high property prices, and an economic slowdown in mainland China have dimmed Hong Kong's growth outlook for 2016 according to the city's white collar workers, a new study has found.
Professional accounting body CPA Australia, which polled Hong Kong-based professionals working in public and private companies, government and other not-for-profit organizations, found 53 percent of respondents described themselves as pessimistic about the region's prospects – a 13 percent increase in gloomy respondents compared to the year before.
Just 9 percent said they saw the economic outlook as "positive," while 34 percent said it was satisfactory.
Almost a third believed Hong Kong's gross domestic product (GDP), the widest measure of economic growth, would expand by between 1-1.9 percent next year; this was a 7 percent decline in the number that expected similarly positive growth in the CPA's 2014 poll.
According to the new poll, 25 percent said GDP growth would decline in 2016, a 13 percent rise in the number of pessimistic votes on the year preceding.
"There is no doubt that the survey results show that economic sentiment for 2016 has turned negative and many respondents believe our competitiveness is declining," Kenneth Chen, divisional president of greater China at CPA Australia, said in a press release.
The main threats to Hong Kong's competitiveness were seen as coming from mainland China, despite the volatility that affected Chinese markets in the third quarter, and from Singapore, the CPA Australia study found. About 67 percent of the respondents thought Hong Kong's competitiveness will decline in 2016.
Last month, the World Economic Forum (WEF) ranked Hong Kong seventh in its Global Competitiveness Index, while Singapore ranked second and China was 28th. Hong Kong has been ranked in the same place for three straight years, with the latest report noting "the challenge for Hong Kong is to evolve from one of the world's foremost financial hubs to an innovative powerhouse." Hong Kong scored low marks for innovation.
The downbeat view of Hong Kong's outlook is echoed by some analysts and economists.
Rajiv Biswas, chief economist for Asia Pacific at IHS Global Insight, told CNBC by email: "Hong Kong is particularly vulnerable to an economic slowdown in China, due to the increasingly close economic ties with the mainland." He added that the impact of China's growth slowdown was already visible in Hong Kong's economic data.
Hong Kong's total merchandise exports fell by 1 percent on-year in the first eight months of 2015; exports to China were down by 2.2 percent. And slow growth in tourism from the mainland hit Hong Kong's retail sales, which clocked a 5.4 percent year-on-year decline in August.
"In recent months, mainland tourism visits to Hong Kong have shown a dramatic slump, with total mainland Chinese tourist arrivals in August down [by] 7.1 [percent] compared to a year ago," said Biswas.
An economic slowdown, along with crackdown on corruption on the mainland, also affected sales of luxury brands in Hong Kong.
"Sales of [luxury] watches and jewelry in Hong Kong [was] down 8.8 [percent] year-on-year in August 2015," Biswas noted.
But some believe that for an advanced economy, the projected GDP figures are acceptable.
In a July report on Hong Kong's outlook, Moody's Analytics said that though the region's growth was expected to come in between 1 and 3 percent for the coming two years, the projected figure was "still robust for an advanced, high income economy."
"Hong Kong has significant buffers to guard against financial and economic shocks," the report noted, citing the region's strong fiscal reserves and international investment position.
In a September report, Moody's issued a revised forecast for Hong Kong's growth outlook to 2.2 percent for 2016.
Even sometimes tense political relations with Beijing were "unlikely to affect economic policies or result in political protests of a scale that could hinder growth or dent Hong Kong's status as an international financial center," Moody's July report noted.
In June Hong Kong's legislature rejected a Beijing-supported electoral bill that proposed Hong Kong residents should vote for their next leader from a list of candidates approved by the Chinese government.
The CPA Australia study said that closer economic collaboration with China would help Hong Kong's economy overcome the negative outlook currently prevalent, especially in sectors such as e-commerce, healthcare, banking and finance.
"China has introduced a number of policies and initiatives that will undoubtedly help drive economic growth in Hong Kong,' noted Chen.
Beijing has used a number of fiscal and monetary policies to stabilize its stock markets and keep growth on track, as well as launching initiatives to establish closer business and trade ties with countries in the region.
These initiatives include the new Asian Infrastructure Investment Bank (AIIB), the Belt and Road initiative, which aims to be one of the largest trade and infrastructure networks connecting the Asia Pacific and Europe, and free trade zones.
