Hong Kong is known as one of the business hubs of the world. Because of its friendly tax policies and labor rates, a lot of people are starting businesses in Hong Kong. Many people view Hong Kong as the best gateway for conducting business in trading with Mainland China and other Asian nations.
Economy of Hong Kong
The economy of Hong Kong is a highly developed free-market economy characterised by low taxation, almost free port trade and well-established international financial market. Its currency, called the Hong Kong dollar, is legally issued by three major international commercial banks, and is pegged to the US dollar. Interest rates are determined by the individual banks in Hong Kong to ensure they are market driven. There is no officially recognised central banking system, although the Hong Kong Monetary Authority functions as a financial regulatory authority.
The Economic Freedom of the World Index listed Hong Kong as the number one country
According to the Index of Economic Freedom, Hong Kong has had the highest degree of economic freedom in the world since the inception of the index in 1995. Its economy is governed under positive non-interventionism, and is highly dependent on international trade and finance. For this reason it is regarded as among the most favorable places to start a company. In fact, a recent study shows that Hong Kong has come from 998 registered start-ups in 2014 to over 2800 in 2018, with eCommerce (22%), Fintech (12%), Software (12%) and Advertising (11%) companies comprising the majority. The Economic Freedom of the World Index listed Hong Kong as the number one country, with a score of 8.97, in 2015.
Hong Kong Economic Indicators
Hong Kong GDP Growth Rate
Hong Kong has an export oriented economy and in spite of small size is the 8th largest trading entity in the world with the value of goods and services exchanged four times the size of GDP. In recent years, Hong Kong has become an international hub for business, trade and finance importers willing to access the Chinese market. As such, the largest sector of the economy is services, which accounts for around 93 percent of GDP.
Hong Kong Interest Rate
In Hong Kong the interest rates decisions are taken by the Hong Kong Monetary Authority (HKMA). The main interest rate is Base rate, adjusted with accordance to the Hong Kong dollar’s demand or supply.
Hong Kong Inflation Rate
In Hong Kong, the composite consumer price index is based on a monthly survey conducted throughout the territory. The indicator consists of 980 consumer goods and services classified into 9 major groups. Housing accounts for 31.6 percent of total weight, Food for 27.5 percent and Miscellaneous Services such as education, communications, information and medical care for 15.9 percent. Transport constitutes 8.5 percent of total index; Durable Goods for 5.2 percent; Miscellaneous Goods for 4.2 percent and Clothing and Footwear for 3.4 percent. Electricity, Gas and Water account for 3.1 percent and Alcoholic Drinks and Tobacco for the remaining 0.6 percent.
Hong Kong Unemployment Rate
In Hong Kong, the unemployment rate measures the number of people actively looking for a job as a percentage of the labour force.
Hong Kong Government Debt to GDP
Hong Kong recorded a government debt equivalent to 38.40 percent of the country’s Gross Domestic Product in 2016. Generally, Government debt as a percent of GDP is used by investors to measure a country ability to make future payments on its debt, thus affecting the country borrowing costs and government bond yields.
Hong Kong Balance of Trade
Since the late 1990’s Hong Kong has been recording trade deficits, as imports grew at a faster pace than exports. Hong Kong major exports are electrical machinery, apparatus and appliances; telecommunications and sound equipment and automatic data processing machines. The country imports mainly machinery and transport equipment; miscellaneous manufactured articles; manufactured goods and food and live animals. Main trading partner is China (40 percent of total exports and 47 percent of total imports). Others include: Japan, Singapore, Taiwan and the United States.
Hong Kong Currency Dollar
The USDHKD spot exchange rate specifies how much one currency, the USD, is currently worth in terms of the other, the HKD.
Hong Kong Stock Market
The Hang Seng is a major stock market index which tracks the performance of around 50 largest companies listed in the Stock Exchange of Hong Kong. It is free floating, capitalization-weighted index. The Hang Seng has a base value of 100 as of June 30, 1964.
Hong Kong Ease of Doing Business
Hong Kong is ranked 3 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Hong Kong improved to 3 in 2019 from 4 in 2018. The Ease of doing business index ranks countries against each other based on how the regulatory environment is conducive to business operationstronger protections of property rights. Economies with a high rank (1 to 20) have simpler and more friendly regulations for businesses.
Hong Kong Bank Lending Rate
Bank Lending Rate in Hong Kong remained unchanged at 5 percent in October from 5 percent in September of 2020.
In Hong Kong, the prime lending rate is the average rate of interest charged on loans by commercial banks to private individuals and companies.
Hong Kong Business Confidence
The business confidence indicator in Hong Kong went up to -8 in the fourth quarter of 2020 recovering slightly from -11 in the previous period and better than -37 reported in the second quarter due to the pandemic crisis. Despite the improvement, most respondents still expect their business situation to be worse than better, namely those in construction (-19), transportation, storage and courier services (-13), financing and insurance (-13), real estate sectors (-12), manufacturing (-9), import/export trade and wholesale (-7) and retail (-5). In contrast, businesses in accommodation and food services (+19) and professional and business services (+4) expect a better situation in Q4.
In Hong Kong, the Quarterly Business Tendency Survey measures the expectations of entrepreneurs regarding changes in business situation in the current quarter compared to the previous quarter. The survey covers a sample of 560 senior managers from the main sectors of the economy: manufacturing; construction; wholesale and retail trade; accommodation and food services; transportation, storage and courier services; information and communications; financing and insurance; real estate; and professional and business services sectors. The survey result is presented as a net balance: the difference between the percentage of respondents choosing “a better outlook” and that choosing “a worse outlook”. A positive sign indicates a likely upward trend while a negative sign, a likely downward trend.
Hong Kong Consumer Confidence
Consumer Confidence in Hong kong decreased to 75 points in the second quarter of 2020 from 76 points in the first quarter of 2020.
In Hong Kong, the Consumer Confidence Index is part of The Nielsen Global Survey of Consumer Confidence and Spending Intentions. The survey is conducted every quarter by the Internet and measures the level of optimism that consumers have about job prospects, personal finances and spending intentions. Twice a year, the survey also includes questions regarding consumer habits and opinions on a number of other issues, ranging from climate change to online shopping and food safety. The index levels above 100 indicate optimism and below 100 indicate pessimism.
Hong Kong Corruption Rank
Hong Kong is the 16 least corrupt nation out of 180 countries, according to the 2019 Corruption Perceptions Index reported by Transparency International. The Corruption Perceptions Index ranks countries and territories based on how corrupt their public sector is perceived to be. A country or territory’s rank indicates its position relative to the other countries and territories in the index.
Hong Kong Credit Rating
Standard & Poor’s credit rating for Hong Kong stands at AA+ with stable outlook. Moody’s credit rating for Hong Kong was last set at Aa3 with stable outlook. Fitch’s credit rating for Hong Kong was last reported at AA- with stable outlook. In general, a credit rating is used by sovereign wealth funds, pension funds and other investors to gauge the credit worthiness of Hong Kong thus having a big impact on the country’s borrowing costs. This page includes the government debt credit rating for Hong Kong as reported by major credit rating agencies.
Taxation in Hong Kong
The taxation system in Hong Kong is generally considered to be one of the most simple, transparent, and straightforward systems in the world.
nal income tax
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How to Start a Business in Hong Kong