Hong Kong has finally tided over another tough year, underpinned by its habitual resilience and strength.

Looking ahead, I believe Hong Kong will be facing two main challenges — external economic issues and the talent shortage.

As for the external economic challenges, economists predict that Hong Kong’s economy will likely grow more slowly than previously expected because of a slowdown in the Chinese mainland’s economy as well the impact of elevated interest rates.

Related to this, in an interview with CNBC, Financial Secretary Paul Chan Mo-po said that Hong Kong may have to gear up for “a lot of volatility” in 2024,  a year “full of external challenges … interest rates (are) going to be higher for longer, geopolitical tensions will continue. And there will also be elections in the US. So there could be a lot of volatility.”

However, Chan is optimistic about the mainland’s economic recovery, saying he believes that it is set to “grow steadily in the pursuit of high-quality development”. As Hong Kong’s economy is closely connected to the mainland’s, it will give Hong Kong “strong backing and optimism” and lend the city the economic boost it needs.

As for the talent shortage, over the 2020-22 period, the local workforce shrank by about 140,000 for several reasons, including emigration and the departure of many expatriates during the pandemic. As I mentioned in some of my previous articles, if Hong Kong wants to maintain or enhance its role as one of the major financial centers in the world, it needs to plan how to attract (or reattract) talent and investment.

However, while Hong Kong is facing these two challenges among others, I think there are many reasons to feel optimistic about Hong Kong in 2024.

When it comes to the external economic challenges, while it is true that those are difficult to predict and tackle, Hong Kong remains resilient nonetheless, which makes us think that the external economic issues may not hit Hong Kong that hard this year. 

Hong Kong is currently involved in many projects that will not only help it maintain its status as an international financial center but also enhance it, such as  Greater Bay Area development

For instance, Hong Kong’s GDP is expected to expand by 3.2 percent in 2024 (which is, in Chan’s words, a “very strong and very resilient” economic growth), with slower private consumption growth offset by faster growth in foreign trade and services exports. GDP growth is forecast to ease to an average of 2.3 percent in 2025-28.

Hong Kong’s GDP grew by 4.1 percent year-on-year in real terms in the third quarter of 2023, having increased by 2.9 percent in the first quarter and 1.5 percent in the second quarter. The labor market continued to improve between August and October as the economy continued to recover. The seasonally adjusted unemployment rate stayed low at 2.9 percent for the August-October period, slightly higher than the July-September level of 2.8 percent. Also, merchandise exports decreased by 5.3 percent year-on-year in September, but increased by 1.4 percent in October, marking an end to a 17-month contraction, and exports decline narrowed to 11 percent year-on-year for the first 10 months of 2023.

My point is, despite the negative external economic circumstances, Hong Kong has had a not-too-bad 2023 and is expected to have a better 2024, which will see the city consolidating its status as an international financial center.

When it comes to the other challenge, the talent shortage, in his 2023 Policy Address Chief Executive John Lee Ka-chiu announced several measures to trawl for and retain talent, measures that are expected to be successful. Among the many measures, in October, the Hong Kong Special Administrative Region government established the physical office of Hong Kong Talent Engage (HKTE), following the launch of the online platform for the HKTE in December 2022, which will provide support for incoming talent and follow up on their needs after arrival.

In 2024, the government will organize the Global Talent Summit cum Guangdong-Hong Kong-Macao Greater Bay Area High-quality Talent Development Conference, to promote regional exchange and cooperation in talent attraction, and it will also expand the coverage of universities under the Top Talent Pass Scheme to broaden the network for attracting global talent.

To sum up, while Hong Kong will undoubtedly face challenges in 2024, the city remains and will continue to be one of the most important financial centers in the world, and offers many opportunities to companies and individuals, both local and from all over the world.

Hong Kong is currently involved in many projects that will not only help it maintain its status as an international financial center but also enhance it, such as the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) development. In China’s 14th Five-Year Plan (2021-25), the central government again recognizes Hong Kong’s potential at the national level and has reaffirmed its commitment to support the HKSAR in strengthening its status as an international financial, trade and logistics hub.

In addition to the huge role that the GBA will play in Hong Kong’s future, we can also mention other opportunities such as fintech development in Hong Kong, the HKSAR’s anticipated entry into the Regional Comprehensive Economic Partnership, and the Connect Schemes.

The author is a fintech adviser, a researcher, and a former business analyst for a Hong Kong publicly listed company.

The views do not necessarily reflect those of China Daily.