GBA – Survey Shows Reassuring Sentiment Uptick
- ♦A reassuring rebound in current performance indices adds conviction to the growth stabilisation story
- ♦Easing expectations indices are a reminder of lingering cautiousness; more credit easing would help
- ♦Respondents are upbeat on AI development, and are gearing up for related opportunities and challenges
The evidence (of stabilisation) is stacking up
Our GBA Business Confidence Index (GBAI), based on quarterly surveys of over 1,000 companies operating in the Guangdong‑Hong Kong‑Macau Greater Bay Area (GBA) and conducted in collaboration with the Hong Kong Trade Development Council (HKTDC), shows that the current performance of ‘business confidence’ improved to 52.9 in Q3‑2023 after easing to 50.0 in Q2. This reflects a rebound in business activity after a Q2 slowdown, likely helped by strong summer holiday demand, as well as some lift from the earlier rounds of policy easing. The corresponding GBAI expectations index slipped to 56.3 from 58.7 prior, albeit well above 50 and higher than the 52.9 current performance index, suggesting further recovery ahead. That said, despite the government’s ramp‑up in economic stimulus in recent months, the narrowing gap between Q3 current performance and expectations scores does suggest lingering cautiousness towards the strength and sustainability of future recovery. Headline credit indices worsened q/q, but surplus cash (and to a lesser extent bank financing costs) appears to be improving.
By industry, ‘innovation and technology’ staged the strongest rebound after underperforming in Q2, sharing the top spot with ‘retail and wholesale’ in terms of current performance. This combination of a recovery in tech sentiment and ongoing retail resilience worked in Shenzhen and Guangzhou’s favour, boosting their current performance scores. The expectations sub‑indices stayed above the 50 neutral mark across all cities and industries, meaning that the underlying post‑COVID recovery trend is expected to remain intact. For thematic questions, we took a closer look at how GBA companies see and deal with rapid technology developments; in particular, we asked respondents how ready they are to take advantage of accelerated AI adoption.
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