The Economic Environment

Published: 2021-09-10 15:35:10
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The Economic Environment
Being one of the leading finance centres in the world (Mainelli and Yeandle, 2007), Hong Kong is substantially a stable economic environment. According to Holmes, Feulner and Grady (2008), Hong Kong has ranked number one on the 'The Global Financial Centres Index' for 14 consecutive years. Nevertheless, Hong Kong faced a huge challenge in 1998 in the Asian financial crisis. Luckily, Hong Kong recovered quickly with the backing of China, now a member of the World Trade Organisation (Lin, 2002), who signed off a free trade agreement, the Closer Economic Partnership Arrangement, between mainland China and Hong Kong.
On the other hand, Hong Kong was faced with the disease of severe acute respiratory syndrome (SARS) in 2003. According to Pine and Mckercher (2004), SARS had the largest negative effect on Hong Kong's GDP. Also, the Hong Kong government (2003) cited that the consumer price index throughout this incident decreased; which actually strengthened the competitiveness of Hong Kong exports. Hong Kong has successfully recovered, and the introduction of the IVS has increased the numbers visiting HKDL. Thus, Hong Kong has a strong economic environment and can afford to support HKDL's development.
Nevertheless, another economic crisis has bought the worldwide economic downturn. Both local and International companies in Hong Kong, for example HSBC and GE Capital, have laid off their employees (Singtao, 2008; Mingpao, 2009). In 2009, GE Capital decided to withdraw from Hong Kong and layoff 50% of their employees (Mingpao, 2009). This has totally affected Hong Kong's local economy and following this trend, unemployment rates will increase steadily and the purchasing power of citizens will be lower, which in turn may affect the viability of HKDL.

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