Small businesses cheer up amid export gloom

Hong Kong's exports plummeted by 17.7 percent in the first quarter of the year and for the 11th month on the trot, while imports of goods fell by 12.7 percent, leading to a trade deficit of HK$111.6 billion for the first three months in a blow to the city's recovery.

But it was not all bad news as confidence among small businesses returned to positive territory for the first time since the pandemic, while the city's restaurants also fared well this year, according to two surveys.

Data from the Census and Statistics Department showed values of total exports and imports in March fell year-on-year by 1.5 and 0.6 percent, respectively, with exports to Asia down by 6.1 percent, but significantly up to the United Kingdom and United States by 15 and 13.8 percent.

A government spokesman said that while the slower growth in the advanced economies will weigh on exports, the accelerated recovery in the mainland and the removal of cross-border truck restrictions should alleviate part of the pressure.

Meanwhile, the Standard Chartered Hong Kong SME Leading Business Index for the second quarter rose by 6.1 points to 52.8 past the 50-neutral mark for the first time since 2020, according to the Hong Kong Productivity Council's forward-looking survey.

It was also the first reading above 50 points in eight years and the second-highest since the index was launched in 2012.

A third of the small and medium enterprises said their turnover had returned to or exceeded pre-pandemic levels, while 93 percent said they would maintain or increase investment this quarter.

The HKPC said the rising index reflects the road to recovery and that the SMEs have regained confidence.

Standard Chartered senior economist for Greater China Kelvin Lau Kin-hang predicts that the short-term boost of confidence following the reopening will fade, but expects the economy will continue to be supported by domestic demand and could grow up to 5.8 percent this year.

Also coming in with good data was food delivery platform Deliveroo, whose Restaurant Confidence Index for the first quarter showed overall business performance rising to 6.5 from 6.1 points in the fourth quarter of last year.

Following the reopening, 64 percent of the restaurants surveyed saw an increase in dine-in revenue, while 59 percent said takeaway business remained unchanged or even increased. Forty-five percent saw profits rise in Q1.

Seventy percent of the restaurants were confident about the outlook for Q2 as compared to only 51 percent in the last quarter, while 89 percent believe that food delivery will remain or become significant.