GBA – Survey Shows Recovery from Tariff Shock
- Q3 GBAI indices rose to multi-year high levels, likely supported by reduced external uncertainty
- Recovery in manufacturing and trading, and financial services activity boosted Hong Kong performance
- Nearly two-thirds of respondents indicated no impact from excessive domestic competition
Growing optimism
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), showed a q/q acceleration in business activity in Q3 following a moderate setback in Q2 after the Liberation Day shock. The ‘current performance’ index for business activity edged up to a four‑year high of 54.7 from 53.1 in Q2. In addition, the ‘expectations’ index rose to a two‑year high of 55.7 in Q3, suggesting a broad‑based recovery in business confidence.
External uncertainty appears to have diminished following the implementation of reciprocal tariffs by the US and the extension of the US‑China trade truce, bolstering manufacturing and trading activity. Additionally, the financial services sector registered the largest q/q increase in the headline index among all sectors, likely benefiting from the buoyant equity market. Specifically, these improvements led to both the current and the expectations sub‑indices returning to an above‑50 level in Hong Kong.
Companies reported higher prices and improved profits compared to Q2, with expectations of a further uptick. This trend partly reflects strengthened efforts by the government and industry associations since July to manage excessive competition. The vast majority (nearly two‑thirds) of respondents revealed that they have not been impacted by 'involution'. However, most expressed increased caution towards
expanding their domestic business. To address the challenges, companies have adopted a variety of strategies, including enhancing product quality, strengthening brand building, and improving cost control.
Please click to read the full report.
First, please LoginComment After ~