Asked the same questions last year, 16 per cent of 357 companies expected a decrease in business turnover in 2023, while 44 per cent forecast a freeze and 25 per cent an uptick.

‘High uncertainty’ ahead for Hong Kong in coming year, finance chief warns

Meanwhile, 42 per cent said turnover next year was expected to be lower than before the pandemic, compared with 40 per cent for 2023.

“Although we fully resumed our economic activities following the pandemic in March, it still feels a bit hot and cold,” chamber chief executive officer Patrick Yeung Wai-tim said.

“We have not returned to a state of economic growth where it feels like we are galloping ahead.”

Chamber economist Doris Fung noted respondents of the survey, carried out last month, had a more cautious outlook on business conditions. Some 40 per cent reported a negative outlook, 22 per cent expected no change, while 29 per cent had a positive outlook.

Last year, those numbers were 33 per cent, 19 per cent and 33 per cent, respectively.

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China’s economy sees a resurgence in the third quarter, beating forecasts

China’s economy sees a resurgence in the third quarter, beating forecasts

“[The survey] showed they are most concerned about external factors,” she said, noting reduced business activity due to a global economic slowdown topped the list of businesses’ worries, followed by geopolitics.

“Large enterprises are more concerned about brain drain, while small and medium-sized enterprises are more worried about some of the inflationary pressures they will face.”

Such apprehensions were also affecting hiring and investment sentiments, with 11 per cent of firms revealing they may cut their headcount over the next 12 months, compared with last year’s 7 per cent.

Twelve per cent said they would reduce capital investment compared with 7 per cent last year.

However, the chamber reported that businesses seemed to have a more positive outlook on mainland China’s economy, as more of them – 32 per cent – said they planned to increase capital investment in areas outside the Greater Bay Area, compared with 26 per cent last year.

3 in 4 Hong Kong companies struggling with talent shortage, chamber survey finds

Fung said the market expected interest rates to peak next year before calming down again in the second half, while there were hopes inflation could be controlled, leading to optimism on the mainland economy in the latter months.

“Of course, a lot of certainties remain, such as the Russia-Ukraine war, and whether Sino-US relations will improve,” she said.

Earlier, Financial Secretary Paul Chan Mo-po warned the city should expect to run at a deficit next year and said Hong Kong could face a HK$100 billion (US$12.8 billion) shortfall this financial year, nearly double the HK$54.4 billion estimated in his February budget.

Last month, authorities also adjusted the city’s growth forecast for 2023 from 4 to 5 per cent to 3.2 per cent.