Business Monitor International


Hong Kong Business Forecast Report

Published 29 January 2014

  • 47 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
Hong Kong Business Forecast Report

Hong Kong

Core Views

  • The Hong Kong economy narrowly eclipsed our expectations for 2.8% growth in 2013, notching a 2.9% full-year expansion on the back of 3.0% year-on-year (y-o-y) growth in Q413. Nevertheless, we remain decidedly below consensus (3.7%) with our 2014 real GDP forecast of 3.0%, with expectations for the ongoing slowdown in China as well as the nascent correction in the Hong Kong property market to take a toll on broader economic activity.

  • We continue to expect the nascent correction in Hong Kong property prices to continue over the course of 2014. That said, we maintain that the correction is likely to be relatively mild, with price declines in the range of 10-15% within the realm of possibility. Some upside risk to this forecast will remain in play as long as the city-state's supply-side woes, including the government missing its land sales targets, continue.

  • Hong Kong notched another budget surplus in FY2013/14, once again defying government forecasts for a modest deficit of HK$4.9bn. Nevertheless, the government has seen fit to tighten the purse strings in both capital and operating expenditure terms in order to shore up the long-term sustainability of its fiscal accounts. Given the government's proactive efforts to maintain a solid fiscal trajectory, we believe that Hong Kong will run a small surplus averaging 0.4% of GDP over the next 10 years.

  • Hong Kong's democratic reform process, the cornerstone of which is meant to entail the introduction of universal suffrage by 2017, remains an issue of considerable contention between pro-Beijing and pro-autonomy interests. On balance, we believe that the Hong Kong government will not be capable of enacting any substantial reforms that are not tacitly approved by Beijing. While this will likely have little effect on Hong Kong's investment or economic outlook, it could nevertheless undermine the city-state's social stability, and we will be closely monitoring the process as such.

Key Risk To...

Table of Contents

Executive Summary
5
Core Views
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Ratings
7
Domestic Politics
8
Tough Road Ahead Towards Universal Suffrage
8
table: Political Overview
8
Long-Term Political Outlook
9
Benign Outlook Despite Democratic Reform Uncertainty
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Ratings
13
Economic Activity
14
China, Property Set To Hit 2014 Growth
14
table : ECONOMIC ACTIVITY
14
Fiscal Policy
15
Still In Rude Health Despite Construction Cost Blowouts
15
table: FISCAL POLICY
16
Monetary Policy
17
Correction Underway, But No Collapse On The Cards
17
table : MONETARY POLICY
17
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Contents
Contents
Export Weakness Still Expected In 2014 In Spite Of China's Surge
19
TABLE: CURRENT ACCOUNT
19
Chapter 3: 10-Year Forecast
21
The Hong Kong Economy to 2023
21
Integration With Mainland Key To Growth
21
table : Long -Term Macroeconomic Forecasts
21
Chapter 4: Business Environment
23
SWOT Analysis
23
BMI Business Environment Risk Ratings
23
Business Environment Outlook
24
Institutions
24
Table : BMI Business And Operation Risk Ratings
24
Table : BMI Legal Framework Rating
25
Infrastructure
26
Table : Labour Force Quality
26
TABLE: ASIA - ANNUAL FDI INFLOWS
27
Market Orientation
28
Table : Trade And Investment Ratings
28
table: Top Export Destinations
29
Operational Risk
30
BMI Industry View
31
Chapter 5: Key Sectors
31
table : Automotive Sales , 2010-2017
32
BMI Industry View
34
table : Food Consumption Indications -Historical Data & Forecasts , 2010-2017
36
table : Alcoholic Drinks Value /Volume Sales -Historical Data & Forecasts , 2010-2017
38
table : Mass Grocery Retail Sales -Historical Data & Forecasts , 2010-2017
39
Other Key Sectors
41
table : Pharma Sector Key Indicators
41
table : Telecoms Sector Key Indicators
41
table: Infrastructure Sector Key Indicators
41
Chapter 6: BMI Global Assumptions
43
Global Outlook
43
Momentum To Continue In H114
43
Table : Global Assumptions
43
Table: Developed States, Real GDP GrowtH, %
44
Table : BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
44
Table : Emerging Markets , Real GDP Growth , %
45

The Hong Kong Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Hong Kong and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market..

An influential new analysis of Hong Kong's economic, political and financial prospects through end-2017, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Hong Kong's economic and industry growth through end-2017.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Hong Kong's country risks against regional peers using BMI's country comparative Risk Ratings system.
  • Evaluate external threats to doing business in Hong Kong, including currency volatility, the commodity price boom and protectionist policies.

The Hong Kong Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Hong Kong economic policy-making and performance impact on corporate profitability over 2013-2017?

BMI provides our fully independent 5-year forecasts for Hong Kong through end-2017 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Hong Kong Business Forecast Report features BMI's forecasts with supporting analysis for 2013 through to end-2017, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Ratings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2017 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Hong Kong and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Hong Kong, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Hong Kong over the next 5-years?

BMI's Hong Kong country Risk Ratings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Hong Kong Market - Political Strengths, Weaknesses, Opportunities and Threats facing Hong Kong.
  • Political Stability and Risk Assessment - BMI's Risk Ratings assess explicit short- and long-term risks to political stability; latest ratings, rankings and trends for Hong Kong's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark Hong Kong's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Ratings with SWOT Analysis - Business environment Risk Ratings for Hong Kong, benchmarked against ratings for regional neighbours.

Country Competitiveness - Competitiveness of Hong Kong's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Ratings.

Key Sector Outlook

Which industry sectors in Hong Kong will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in Hong Kong's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2008-2012, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2013-2017, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express