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The Hong Kong economy is one of the most developed and richest economies worldwide. With 15th place on the global HDI ranking and a gross domestic product (GDP) per capita that stands at 55,084 USD (World Bank, 2014), it takes top places in international welfare statistics.
In 2014, the Hong Kong economy grew only moderately by 2.3 percent compared to 2.9 percent in 2013 (2015 estimate: 2.8 percent). This is attributed to weak global economic recovery (responsible for a weak foreign trade), declining income from tourism and a weakening domestic demand.
The labour market had an unemployment rate of 3.3 percent in 2014 and continues to fall further. Inflation stood at 3.5 percent for the same period and also follows a decreasing trade, which reflects the slightly declining cost pressures on Hong Kong invoice. The still overheated real estate market has hindered a marked decrease in inflation statistics.
The Hong Kong exports have increased by 3.2 percent, according to the Hong Kong Statistical Office in 2014 compared to the same period last year. The rise is attributed to increased exports to neighbouring Asian countries of Taiwan, Singapore, Vietnam and India. Hong Kong's total imports, particularly from Asia (Taiwan, India, Thailand, China) and the United States, rose in 2014 by a total of 3.9 percent.
Given a small internal market of seven million inhabitants, Hong Kong is highly dependent on foreign trade and related services. Traditionally, Hong Kong is satisfying this dependency by maintaining a largely open external economic policy and restrained regulation of the economic system.
Hong Kong is one of the world's most important financial centres. About 70 of the world's 100 largest banks operate in Hong Kong. With 203 licensed banks and 63 representative offices, it has one of the largest market densities in the financial sector worldwide. The Hong Kong Stock Exchange is the sixth largest exchange in the world and the third largest in Asia. Hong Kong is also the second largest private equity centre in Asia.
Moreover, more than 60 million visitors in 2014 make Hong Kong one of the main tourism destinations in Asia. However, diversification in this sector is yet to be achieved as around three-quarters of these visitors come from mainland China.
Hong Kong's economy has undergone a profound structural change since the opening of the economic corridor with China in the 1980s. The focus on the production of consumer goods and production capacities has largely transferred to the neighbouring Pearl River Delta of China and has been replaced by services instead. Today, the manufacturing sector contributes only 3.1 percent to the gross domestic product, while the wholesale and retail, import and export, restaurants and hotels contribute 32 percent, financial and business services, insurance and real estate businesses account for 14 percent and almost 19 percent of the GDP comes from social administration and the personal service sector. The local production of goods is now restricted to a few high quality niche productions like research sensitive and capital intensive electronics. Market opportunities exist in the fields of culture and art, innovation and technology, certification services and environmental technology.
Why invest in Hong Kong?
- Hong Kong has a high degree of legal certainty, low tax burden and a very successful fight against corruption, which are all crucial steps towards economic success.
- Hong Kong educational system is one of the best in Europe. Its universities are consistently ranked among the top 100 institutes in the world. In addition, the Hong Kong educational sector places special emphasis on the English language. This is the reason why many university graduates in the country speak fluent English, apart from the local language of Cantonese.
- Hong Kong is centrally located at the heart of Asia and thus is in close proximity to the leading economies of the region. It also is a gateway to mainland China.
- Hong Kong boats of one of the least taxed economic systems in the world. The country only enforces three direct taxes: the profit tax has a ceiling of 16.5 percent and the salaries and property tax are levied at a maximum of 15 percent. In addition, the free port status of Hong Kong ensures that the clearance of goods isn’t a hassle and duty is levied on a select, few items.