Executive Search in Hong Kong – 2021 Outlook
Hong Kong Sees Turning Point in 2021
Hong Kong should be lifted out of recession by the end of the year by China’s grand plan to stimulate domestic growth, predicts the Hong Kong Financial Secretary Mr. Paul Chan.
The economy has been undermined by a triple onslaught from the launch of the trade war between the United States and China in 2018, the eruption of anti-government protests in the summer of 2019 and the arrival of Covid-19 last January.
Gross domestic product has contracted for five consecutive quarters, declining 3.5% in real terms in the third quarter in 2020 from a year earlier. In 2019, GDP shrank 1.2%. The government estimates the economy will contract by 6.1% in 2020, a record high.
The difficulties may still be there in 2021, but the turning point is emerging. There will be relatively huge challenges in the first half of the year but, in the second half, there is hope that there will be stronger momentum for recovery. This is dependent on containing the coronavirus pandemic, including a mass vaccination drive starting in February which could accelerate the turnaround of the severe downturn in the economy.
The Employment Market
Businesses relying on tourism & travel will take longer to recover, given the current restrictions on travel. Some alarmingly high redundancies have already taken place in the airline and supporting industries, including the closure of a HK regional airline.
Overall retail sales dropped 7% to 27.33 trillion yuan (US$4.18 trillion) on the mainland in the first three quarters of the year. Sales by online shopping rose about 10% to around 8 trillion yuan.
Hong Kong is used to shopping on the internet, and businesses should make better use of online platforms to seize opportunities.
Information Technology which is accelerating business transformation in big data and analytics, social interactions, daily living and more … is a healthy market for new jobs, including the rise of Fintech companies.
While restaurants have been heavily affected by the pandemic, they do not represent a big part of Hong Kong’s GDP. It is estimated that around 70% of restaurants will close as an aftermath of the present crisis, with many job losses.
White collar, or office based, jobs have also seen mass redundancies across industries, as markets shrink. Job functions affected are across the board as well. Manpower diminishes to make way for the rise of technology.
A mixed 2021, and better in second half
As long as Mainland China maintains its economic health, Hong Kong should benefit greatly from it.
In its “World Economic Outlook” report released in October last year, the International Monetary Fund estimated the mainland’s GDP would grow 8.2% in 2021, while Hong Kong’s would expand 3.7%. It projected global growth would be about 5.2%.
Professor Terence Chong, an economist at Chinese University HK, was optimistic about the Hong Kong economy. He said export figures for November last year had already exceeded pre-Covid-19 levels.
It was an indicator of where the city’s economy was heading: trade and logistics make up about 20%of Hong Kong’s GDP.
Official figures showed the value of exports rose 5.6 %in November from a year ago to HK$379.6 billion.
“The city’s GDP shrank 9.1% in the first quarter last year.” Chong said, adding that if Hong Kong’s economy in the first quarter of 2021 returned to what it was before the outbreak, growth would already be 9.1%.
Justice Minister Teresa Cheng also pointed to China’s five-year plan as central to the city’s prospects. She said the development goals for the Greater Bay Area offer tremendous opportunities for Hong Kong’s legal sector due to the central government’s support for the city to become an arbitration centre.
The Greater Bay Area is Beijing’s plan to connect Hong Kong, Macau and nine cities in Guangdong provinces into an economic and innovation powerhouse.
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Information on Cornerstone’s Executive Search Office in Hong Kong