Optimism over economic outlook for 2018 surges among Hong Kong’s finance professionals
Survey by accountancy body finds strong economies in mainland China and the US, as well as new local tax policies contributing to positive views
Finance professionals in Hong Kong are six times more optimistic about the city’s economic outlook in 2018 compared to last year, thanks to economic growth in mainland China, a firm US economy, low interest rates and a government plan to ease tax burdens on companies, according to a survey released on Thursday.
The poll by the Hong Kong office of the Association of Chartered Certified Accountants (ACCA), a global accountancy body, found that 32 per cent of respondents were positive about the city’s business and economic prospects in 2018, increasing from just 5 per cent at the same time last year.
Projections of strong economic growth in China and a steady performance in the US are likely to help the city’s prospects, given its role as an international financial centre, the ACCA said.
“China and the US are both important sources of direct investment, and they are also the city’s major export markets,” said Eunice Chu, head of policy at ACCA Hong Kong. “Hong Kong’s economy is likely to benefit from China’s economic growth and a US economic recovery.”
The World Bank has forecast China’s economic growth at 6.4 per cent in 2018, slightly lower than last year’s forecast 6.8 per cent, while the International Monetary Fund projects 6.5 per cent. Participants in the annual Forecast of China’s Economy for 2018 conference in New York on Tuesday, however, put growth this year at 6.8 to 7 per cent.
Meanwhile, US GDP growth is expected to remain at a steady 2.5 per cent in 2018, according to a forecast released at the Federal Open Market Committee meeting in December.
At the same time, a promise by Hong Kong’s chief executive, Carrie Lam Cheng Yuet-ngor, in her policy address in October to reduce the profit tax on companies and give tax breaks for investment in research and development, aimed at helping smaller firms, also boosted sentiment.
“The super tax deduction for qualifying research and development expenditure is also expected to attract more enterprises to engage in such activities in Hong Kong, as well as bringing China and overseas technology institutes to set up operations in Hong Kong,” Chu said.
Under the change, companies will pay tax of 8.25 per cent on the first HK$2 million (US$256,000) of profits, down from the previous flat rate of 16.5 per cent.
Overall, 65 per cent of respondents to the survey said they were positive when asked how Lam’s government will affect the business environment.
Separate data on Thursday showed that Hong Kong’s private sector grew at its fastest pace in nearly four years in December, fuelled largely by exports to mainland China and higher tourist arrivals.
Factors expected to negatively affect Hong Kong’s economy included high property prices, the political environment and competition from other countries, the ACCA said.
The survey was carried out in November 2017 and polled 334 respondents, including accounting and finance professionals from various industries and age groups.