Hong Kong: Economic Report 2021

Executive Summary

The city’s economy saw a recovery in 2021, after two consecutive years of recession. However, it will not exceed the size of 2018 (prior to the mass protests and pandemic) probably until 2023, following an extended slump in consumer spending and private investment. Tourism will lag behind the recovery in other sectors due to the zero-COVID policy followed by Hong Kong. From a sectoral perspective, financial industries will remain the core growth driver of the economy in mid-term outlook.

The service sector continues to dominate Hong Kong’s economy (93% of its GDP and 89% of its total employment) while the manufacturing sector is small and is focused on non-tradable. The local government follows very strict COVID-19 rules that discourage international travel. Nearly 60% of the companies in Hong Kong say that rule of law has worsened in the last 12 months1 and the size of the Swiss community has shrunk by more than 10% since 2019. Nevertheless, Hong Kong still holds many business opportunities, particularly in transport and logistics and the financial services sectors. As long as mainland China keeps access to its capital market controlled, Hong Kong will remain an important financial hub by providing access to China for international investors and to the international market for mainland investors.

In 2022, Hong Kong’s economy will still face strong headwinds. Concerns over quarantine rules for international arrivals, other COVID-19 containment measures and the national security law are intensifying the brain drain2 and are threatening Hong Kong's status as an international business hub.

In 2021 Switzerland was Hong Kong’s 23rd largest import and 13th largest export market. Total Swiss export in goods including gold bars and precious metals increased by CHF 3 billion (+56%) to CHF 9 billion, while total Swiss import decreased considerably by CHF 7 billion (-62%) to CHF 4 billion. As consequence the total trade volume decreased by 21% (from CHF 17 billion to CHF 13 billion). The difference is mainly due to gold bars and other precious metals, as Switzerland imported less of these goods from Hong Kong in 2021. Trade volume without gold bars and other precious metals amounts to CHF 5 billion. Stocks direct investment from Switzerland increased by 9.1% to USD 13.1 billion.