[cs_content _p=’8130′][cs_element_section _id=”1″ ][cs_element_layout_row _id=”2″ ][cs_element_layout_column _id=”3″ ][cs_element_text _id=”4″ ][cs_content_seo]The Standard Chartered GBA Business Confidence Index (GBAI) for the third quarter of 2024, jointly released by Standard Chartered and the Hong Kong Trade Development Council (HKTDC), indicates a modest improvement in business sentiment across the Greater Bay Area (GBA). The “expectations” index rose to 55.2 from 54.8 in Q2, signaling a continued optimistic outlook among firms, while the “current performance” index dipped to 50.6 from 54.1, reflecting weakening economic momentum in the region after a challenging first half of the year.
Hong Kong Leads Growth Among GBA Cities
Hong Kong emerged as a strong performer in the GBA, registering significant gains in both “current performance” and “expectations” sub-indices. The city posted the highest “expectations” score, climbing to 58.8 from 49.7 in Q2, marking the steepest rise among all 11 GBA cities. Meanwhile, Hong Kong’s “current performance” showed a slight increase of 0.2 points to 47.3. Other cities like Dongguan also reported improvements, reflecting a positive business sentiment in the region.
Manufacturing Sector Faces Pressure Amid Trade Concerns
The manufacturing sector in the GBA showed a decline, with concerns over potential trade disruptions playing a key role. Manufacturing confidence remained stable at 54.1, but the uncertainty surrounding U.S.-China trade relations, particularly the possibility of increased tariffs if former U.S. President Donald Trump wins the November election, has affected sentiment. However, the sector’s performance still remained above the neutral mark.
Kelvin Lau, Senior Economist, Greater China at Standard Chartered, noted: “The data aligns with the economic trends observed in August, including slower growth in industrial production, retail sales, and fixed asset investments. However, the impact of China’s stimulus package announced in late September and the potential Federal Reserve rate cuts have yet to be reflected in the Q3 results, and these could boost business sentiment in the near term.”
Key Risks: Interest Rates, Economic Growth, and Trade Barriers
Despite some positive momentum, businesses in the GBA face several risks. Around 60% of respondents identified “higher global inflation and interest rates” (47%), “China’s growth slowdown” (46%), and “trade tariffs and sanctions” (42%) as their top concerns over the next 12 months. Additionally, trade barriers have had a noticeable impact, with 47.2% of businesses affected by tariff hikes, 44.2% by sanctions, and 34.6% by non-tariff barriers.
With potential trade disputes between China, the U.S., and the EU looming, 88% of respondents involved in external trade said they would front-load export orders, and 81% planned to front-load imports to mitigate risks.
GBA Manufacturers Cautiously Optimistic
Irina Fan, HKTDC Director of Research, acknowledged that while manufacturers in the GBA remain cautious about future U.S. tariffs, around 50-60% of respondents did not foresee any significant negative impact on their business.
About the GBAI
The GBAI is the first forward-looking quarterly survey of business sentiment across the Greater Bay Area. Covering more than 1,000 companies across sectors such as manufacturing, retail, financial services, and technology, the index provides valuable insights for investors and businesses to better gauge the current business climate and formulate strategies for the GBA market.\n\n[/cs_content_seo][/cs_element_layout_column][/cs_element_layout_row][/cs_element_section][/cs_content]
