Economic overview
GDP contracted by 2.9% in the final quarter of 2019 from a year sooner, denoting the second back to back quarter of year-on-year constriction. The nearby social episodes with brutality during the quarter took a further overwhelming cost for monetary conclusion just as utilization and the travel industry related exercises.
Examined by significant segment, Hong Kong’s all out fares of merchandise demonstrated a to some degree smaller year-on-year decrease in the final quarter of 2019 upon a low base of correlation. However, the year-on-year fall in fares of administrations augmented outstandingly to 25.0% in the midst of a serious difficulty in inbound the travel industry.
The economy will probably recuperate in H2 this year on a great base impact, a possible recuperation in business certainty and some help from monetary improvement. Be that as it may, movement will stay collapsed, particularly in H1, as political disturbance will probably proceed. More slow than-anticipated development in territory China and continuous U.S. – China levies present drawback dangers. Our board extends the economy will flatline in 2020, which is down 0.3 rate focuses from a month ago’s estimate. Moving to 2021, the board sees the economy becoming 2.3%.
Main sectors of Industry
Hong Kong depends intensely on financial services, production of electronics, and tourism as its main industries. The rural division is nearly non-existent since Hong Kong has no common assets and is totally dependent on crude material and vitality imports. The commitment of agribusiness to the economy is basically invalid at 0.1% of GDP and just 0.2% of the workforce utilized in 2017. Hello there tech vertical cultivating is being embraced as an option in contrast to conventional cultivating (South China Morning Post). The generation made by the division diminished by 1.4% in 2018. Concerns over food safety from Chinese products, have also been a factor in the boom of local farming initiatives (EcoWatch).
The assembling business speaks to a bigger, though still little portion of GDP (7.22%) and work (11.7%). Principle businesses incorporate hardware, electrical machines, informatics and media communications. In 2018, the mechanical segment stagnated.
The tertiary sector is the core of Hong Kong’s economy. Financial services, trading and logistics, the travel industry, import/send out, air transport, proficient and maker administrations are customary key enterprises in Hong Kong. The administrations segment contributes around 92.2% of GDP and utilizes about 88.1% of the workforce. Hong Kong goes about as an assistance community for Asian organizations, especially for those exchanging with China. As per figures distributed by the Commercial Register, there are more than 900 thousand organizations enlisted in Hong Kong. Retail deals developed at their slowest pace in year and a half during December 2018 after U.S-China exchange pressures and careful customer estimation (Reuters). The administration part developed by 2.6% in 2018.
The services sector contributes around 92.2% of GDP and employs nearly 88.1% of the workforce. Hong Kong acts as a service centre for Asian companies, particularly for those trading with China. According to figures published by the Commercial Register, there are over 900 thousand companies registered in Hong Kong. Retail sales grew at their slowest pace in 18 months during December 2018 following U.S-China trade tensions and cautious consumer sentiment (Reuters). The service sector grew by 2.6% in 2018.
Taxes in Hong Kong
The Corporate Tax Rate in Hong Kong stands at 16.50 %.
Assessable benefits of corporation are taxed at the corporate expense pace of 16.5%. There are some assessment motivations for extraordinary business tasks, for example, charge exception for benefits inferred by seaward assets and benefits got from working boats in Hong Kong.
Investing in Hong Kong
Investors are keeping a “cautious” eye on Hong Kong’s financial markets heading into 2020 as the city’s economy takes a battering from the US-China trade war and months of civil unrest.
“Entering into a period of stability would be a step in the right direction,” said Tara Joseph, the president of the American Chamber of Commerce in Hong Kong. “However, it will take months to restore confidence in many aspects of the economy. The city’s global reputation has been tarnished and we need to actively show that change is afoot to restore peace, security and a solution to the ills affecting society.”