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HSBC survey forecasts local, Indian growth

Update: January, 31/2008 - 00:00

HSBC survey forecasts local, Indian growth


HCM CITYThe emerging markets of Viet Nam and India are the most optimistic across a wide set of key indicators of a recent survey by the Hong Kong and Shanghai Banking Corp (HSBC).

The Asia-Pacific Small Business Confidence Survey, conducted for HSBC by research company TNS in the fourth quarter of 2007, covered 2,700 SMEs in Hong Kong, mainland China, Taiwan, Singapore, India, Viet Nam, Korea, Malaysia and Indonesia.

Small and medium enterprises (SMEs) in Asia remain positive about prospects for Asia’s economic growth and trade activity this year, say the results.

Companies were asked about their local economic outlook for the next six months, their plans to increase or reduce capital investment and staffing levels, as well as their expectations about trade volumes with mainland China, the rest of Asia and the rest of the world.

Margaret Leung, HSBC’s Global Co-head of Commercial Banking, said: "The fact that the vast majority of SMEs expect economic growth to continue in 2008 is a testament to the resilience of the SME sector. In the face of growing economic uncertainty in the US, emerging markets still see great opportunity for growth, as intra-Asian trade grows and the small business sector is learning to adapt quickly to changing global conditions.

"As the banker to these businesses, HSBC is excited to be part of this development."

SMEs sit pretty

Viet Nam SMEs were the most optimistic in the region, followed by those in India and mainland China. More than two-thirds of SMEs in Viet Nam surveyed said they expect the economy to grow more than 4 per cent in 2008. An overwhelming majority, 90 per cent, expect the economy to grow at a faster pace while only a mere 1 per cent expect the pace to slow down.

Capital investment plans

SMEs in Viet Nam and India are acting on their positive economic outlook with increased capital investment in the first half of 2008. Three – quarters of the Viet Nam SMEs plan to increase their current expenditure levels. Hong Kong SMEs are more cautious: 61 per cent plan to maintain the same level of capital expenditure as last year and 26 per cent plan to increase investment.

Recruitment plans

While 72 per cent of SMEs across Asia plan to maintain current staffing levels, in Viet Nam, 59 per cent are planning to hire more workers. 41 per cent expect to maintain the same, and none will cut jobs. SMEs that engage in cross-border trade were asked about their expectations of trade volumes with mainland China, the rest of Asia and the rest of the world. Viet Nam and India SMEs are the most optimistic about trade growth with mainland China, trade with the rest of Asia as well as with the rest of the world.

In Viet Nam, impressively, almost four-fifths expect trade to grow. Among the positive 78 per cent, 38 per cent believe trade volume with mainland China will grow by over 20 per cent. Growth expectations in trading activities with the rest of Asia and the rest of the world is somewhat similar to each other and to that with China. Only a very small minority (4 per cent) expect trade volume to decrease this year in each of the three areas.

"Viet Nam’s economy saw strong GDP growth by a cumulative average rate of 7 per cent over the past decade and peaked at a record high 8.44 per cent in 2007. In the past year alone, we have seen nothing short of a sea change in terms of policies as a result of market liberalisation," said Huynh Buu Quang, Senior Vice President, Head of Commercial Banking, HSBC Viet Nam.

"Given these supporting factors, the country’s SMEs are becoming more and more active to catch all the golden opportunities offered by the second fastest growing economy in the region. The 290,000 SMEs in Viet Nam represent considerable collective economic might and their optimism bodes well for local economy as a whole," he added.

"HSBC Commercial Banking shares the aspirations of SMEs to grow and succeed domestically and internationally and we have the expertise and network to support that. It’s heartening to see that SMEs are looking to the year ahead with confidence." — VNS

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