On 15 April 2025, the Standard Chartered GBA Business Confidence Index (GBAI), produced in collaboration with the Hong Kong Trade Development Council (HKTDC), revealed a notable improvement in business sentiment across the Greater Bay Area (GBA) for the first quarter of 2025.
The GBAI's "current performance" index rose to 53.5 from 50.7, marking the highest level since the second quarter of 2024. Six of the eight components of the index experienced quarter-on-quarter increases, with previously underperforming areas such as "capacity utilisation" and "profits" rebounding above the neutral threshold.
The "expectations" index for business activity also saw a rise, climbing to 54.3 from 52.9 in the previous quarter. Notably, seven of the eight expectation sub-indices improved, driven primarily by a 3.1 percentage point increase in expected profits and a 2.8 percentage point rise in raw material inventory.
All city sub-indices, except for Shenzhen, showed growth. Hong Kong achieved a fourth consecutive quarter of rising current performance, reaching 53.5, while its expectations index soared to 56.9, second only to Guangzhou. Guangzhou recorded the highest figures, with current and expectation indices at 60.3 and 58.0, respectively.
What the numbers suggest
The survey suggested that GBA businesses had initially managed the impact of recent US tariff increases effectively, buoyed by positive market sentiment linked to the DeepSeek breakthrough and anticipated policy support from Chinese authorities. However, the more optimistic outlook recorded during the survey period (February-March) may not have fully accounted for the subsequent announcement of significant US reciprocal tariffs.
Kelvin Lau, senior economist at Standard Chartered, highlighted the increasing likelihood of China implementing monetary easing measures, such as cutting reserve requirements or policy rates, to stabilise market sentiment post-tariff announcements. He emphasised the need for Hong Kong to enhance short-term support for small and medium-sized enterprises (SMEs) and diversify its trade.
Looking forward, 41% of respondents anticipated a positive impact from consumption-boosting initiatives introduced by China in January, while 38% believed the consumer goods trade-in programme would benefit their businesses. Many respondents suggested that relaxing market access for private and foreign investment could further stimulate services consumption.
According to Wing Chu, principal economist at HKTDC, enhancing domestic demand remains a government priority, with over half of the respondents positioned or planning to expand into the mainland consumer market. Additional government support could further strengthen their operations.
