The Chinese University of Hong KongThe Centre for Quality of LifeOctober Survey on Public Perception of the Financial Tsunami and the Economic Conditions
The Centre for Quality of Life at The Chinese University of Hong Kong (CUHK) conducted a survey on the public perception of the financial tsunami and the economic conditions from 27 to 28 October. The survey was conducted by Professor Andy Kwan Cheuk-chiu, Director, The Centre for Quality of Life, CUHK. A total of 506 Hong Kong residents aged 18 or above took part in the survey and answered questions about their family financial situation, their perception towards the business environment, the economic outlook and the impact of the financial tsunami, as well as their sentiment over consumption.
From table 1, it was revealed that only 5% of the respondents said they were financially “better off” than a year ago, decreased by 6 percentage points from the survey results in September. 48% said “the same”, while 46% said they were “worse off”, up 9 percentage points from September.
On consumer confidence, 14% of the respondents thought it “is” time to buy major household goods, while 67% said the opposite and 19% said they “don’t know or it’s difficult to tell”. Comparing with the findings in September, those saying “yes” increased by 4 percentage points while those saying “no” decreased by 2 percentage points.
10% of the respondents believed they would be financially “better off” in the coming year, recording a decrease of 3 percentage points from the September survey. 34% believed they would remain “the same”. 48% believed they would be “worse off”, showing a 10 percentage-point increase from the previous survey.
Only 4% of the respondents were optimistic over the economic outlook in the coming year, saying the business environment would be “good”. 28% and 66% said “mediocre” and “bad” respectively. Comparing with the previous survey, those saying “good” dropped 4 percentage points while those saying “bad” increased by 13 percentage points.
39% said they were “optimistic” about the economic conditions of Hong Kong for the coming five years, up 8 percentage points from September. 25% predicted the situations would be “the same”. 30% said they were “pessimistic”, showing a 2 percentage-point decrease from the previous survey.
The survey also found that only 6% of the respondents expected the employment situation would “improve” in the coming year and 10% expected it to remain “unchanged”. 81% thought it would “deteriorate”. Comparing with the September survey, those saying “improve” dropped by 4 percentage points, while those saying “deteriorate” increased drastically by 21 percentage points.
The survey also collected the views of the Hong Kong people on the impact of the recent financial tsunami. 70% of the respondents thought Hong Kong “is” entering a period of recession, while 20% did not agree and 10% said they “don’t know or it’s difficult to tell”.
21% of the respondents were confident that the HKSAR Government “can” lead Hong Kong through the tsunami within a short period of time, whereas 67% thought the opposite. 12% of the respondents said they “don’t know or it’s difficult to tell”.
The Indices of Consumer Confidence, Consumer Sentiment and Employment Confidence(see table 2)
The Index of Consumer Confidence is compiled from the scores of questions number 3, 4 and 5. The higher the index, the stronger people’s confidence about economic conditions.
The Index of Consumer Sentiment is compiled from the scores of questions number 1 to 5. A higher index indicates people are more optimistic about the present situation and future development of economic conditions.
The Index of Employment Confidence is compiled from the score of the sixth question. A higher index shows a stronger confidence about employment situation.
For the first two indices, the baseline is January 2000 with the index as 100. For the Index of Employment Confidence, the baseline is February 2000 with the index as 100.
The Indices of Consumer Confidence and Consumer Sentiment in October 2008 are 59.8 and 61.1 respectively, dropped 6.3 and 5.7 percentage points from the September survey. The consumer confidence of the Hong Kong people has been hard hit by the following factors: the recent financial tsunami, global economic recession, credit crunch and the asset price slump.
The Index of Employment Confidence hits a record low of 22.5, plunged by 21.6 points from the September result, indicating a strong negative sentiment towards the employment outlook among the residents.
In conclusion, the consumer confidence of Hong Kong people has dropped drastically to the same level as that recorded during the SARS period in March 2003, showing that the residents are very anxious about the economic outlook. This will adversely affect domestic demand. Together with the worsening global economy, the local economy will inevitably enter a period of recession.
For more information on The Centre for Quality of Life at CUHK, please visit: http://www2.cuhk.edu.hk/ssc/qol