CPA Australia Survey: Two-thirds of Accounting Professionals Expect Hong Kong�s Recession to Continue into 2020

HONG KONG, CHINA
-�Media OutReach - 17 November 2019 – 66 per cent of respondents
from the accounting and finance sector expect Hong Kong’s economy to contract
in 2020 while 73 per cent believe that the city’s competitiveness will decline,
according
to the latest Hong Kong Economic Survey conducted by CPA Australia.

Growing
anxiety about the economic outlook

The
rather bleak prospects for the year ahead is reflected in the two-thirds of
respondents forecasting Hong Kong’s economy to contract in 2020. This
represents a significant decrease in economic confidence from previous years, when
only 20 per cent of respondents expected Hong Kong’s economy to contract in
2019 and 4 per cent in 2018.

The
most frequently selected prediction is for Hong Kong’s GDP to decline by
greater than one per cent (chosen by 43 per cent of respondents). This
signifies a major shift to negative sentiment from previous years where the
most popular choice was for GDP to expand by 2 to 2.9 per cent in both 2018 and
2019.

It
comes as no surprise thus, that 73 per cent of respondents believe that the
competitiveness of Hong Kong will decline in 2020, up 25 percentage points from
2019. 

In
the jobs market, the share of respondents who expect that there will be a
reduction in company headcount doubled from 15 per cent in 2019 to 30 per cent
in 2020, although two-thirds of respondents (66 per cent) believe that their company’s
headcount will either remain the same or increase in 2020.

This
negative outlook is reinforced by 90 per cent of respondents expecting retail
property prices to decline in 2020 compared with 42 per cent of respondents for
2019. The share of respondents who believe retail property prices will decline
by more than 11 per cent in 2020 increased to 65 per cent from 24 per cent in
2019.

Mr
Roy Lo, Divisional President of Greater China of CPA Australia 2019
says: “There is no doubt that external and local uncertainties are making our
respondents anxious over the economic outlook. The slowing global economy, the
US-led trade war, and lower economic growth in mainland
China are negatively impacting Hong Kong’s economy, with the continuing social
unrests making a tough situation
worse.”

Actions on
recovering the business community

“The survey findings show that 2020 should be a
challenging year for business. It is therefore not surprising that half of our
accounting and finance respondents believe that ‘cost management’ will be their
company’s key strategic focus for 2020. This suggests that many companies are
reacting to expected difficult conditions with a more prudent approach.

“Accounting professionals have a wide range of skills
to assist businesses to manage through this period and prepare for future growth.
This includes reviewing cost structures, improving cash flow management and
seeking improvements to business operations”, Lo says.

“Additionally, ‘investing in innovation and
technology’, which may enhance productivity and transform business models is
the second most popular choice (30 per cent). This type of investment indicates
that companies are eyeing long-term growth and are seeking to stay ahead of
continual technology disruption.

“Technological
advances will not stop disrupting traditional industries and transforming
business models regardless of the slowing global economy. We are therefore
encouraged that despite the economic outlook, nearly a third of respondents
expect that investing in innovation and technology will be one of their
company’s key strategic focuses in 2020.”

“Businesses
should at least keep up with technological trends to cater to changing customer
needs, new regulations and new industry practices. For example, the launch of
virtual banks may change how people consume traditional banking services while
the role out of 5G may unleash the potential of e-sports to target the young
generation,” Lo says.

When
asked what are the most effective contributors to the Hong Kong’s economy,
respondents were again most likely to identify Hong Kong’s low and simple tax
system and the Greater Bay Area (GBA) initiative as the top
positive factors. Our respondents believe the continuation of these policies is
important to Hong Kong’s future success.

 ”Many respondents believe
the GBA initiative will be a major contributor to Hong Kong’s future growth.
The policy measures announced recently will make it easier for Hong Kong
residents to live and work in other parts of the bay area. We suggest that the
government considers offering more funding and assistance to help local firms
expand into markets outside of Hong Kong and exploit opportunities from the
Greater Bay Area initiative,” Lo says.

     

Mr Lo further
suggests: “To rebuild Hong Kong’s business confidence and
competitiveness, CPA Australia urges the government to take actions to enhance
Hong Kong’s position as an international financial centre by leveraging Hong
Kong’s financial strengths and infrastructure advantages to continue driving
the development of FinTech, asset management, green finance, and to introduce
more targeted tax incentives.”

Looking ahead, Lo concludes, “We are living in a world
that is increasingly volatile, uncertain, complex, and ambiguous (VUCA). Companies
must therefore be increasingly agile to respond to this VUCA challenge while
also keeping an eye out for growth opportunities. Upskilling the workforce and
acquiring technology-related knowledge are vital to maintaining competency in
the business world nowadays.”

About the survey

The survey was
conducted from 8 October to 1 November 2019 with 207 of CPA Australia’s Hong
Kong members participating, including finance and accounting professionals from
listed companies, multinational corporations, private enterprises, government,
and not-for-profit organisations.

About CPA Australia

CPA Australia is one of the world’s largest
accounting bodies with more than 164,000 members working in 150 countries and regions
around the world, with more than 25,000 members working in senior leadership
positions. It has established a strong membership base of more than 19,000 in the Greater China region.