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Greater Bay Area: 2024 Outlook

  • Article
  • While the headwinds may not fade anytime soon, supportive policy measures have recently been stepped up
  • Key areas to watch: advanced manufacturing, green and low carbon development, regional integration, and opening up
  • We expect Guangdong’s economy to accelerate a tad in 2024, to 4.8%, just below our 4.9% national GDP forecast

A challenging and transitional year for GBA

Recovering and healing

Guangdong’s economy grew 4.5% y-o-y in the first three quarters of 2023, with services and consumption leading the recovery from a year before. Still, this was slower than the national average, as the global electronics down-cycle and the property slowdown hit the province relatively hard. We expect Guangdong’s economy to accelerate slightly in 2024, to 4.8%, just below our national GDP forecast of 4.9%. For Hong Kong, we expect an ongoing recovery backed by a strong labour market and the gradual economic recovery in mainland China. Softer external demand and elevated interest rates may continue to weigh on market sentiment and investments. That said, growth will likely be solid in the GBA for 2024, on our estimates, and we may see improving momentum in the second half of the year.

HSBC forecast for Guangdong’s GDP growth for 2024
HSBC forecast for mainland China’s GDP growth for 2024
Trade and property investment remain the biggest headwinds

Several trends are likely to continue in the early part of 2024. Firstly, services and consumption can still provide a major support for growth. External demand may be a near-term drag; however, export orders have shown initial signs of a recovery, and Guangdong’s export growth in new energy products, chips and ships remains strong thanks to good demand in some areas. On the domestic front, we believe property easing measures and a ramp-up of government support for infrastructure will gradually feed through, paving the way for domestic demand. Green shoots have been seen in second-hand housing transactions in large Guangdong cities lately. Nonetheless, it will take time for property demand to recover and for the new model to revitalise commercial housing.

Guangdong’s export growth in new energy products, chips and ships remains strong

Challenges aside, fresh opportunities are rising

Guangdong is ahead of its peers in embracing strategic emerging industries. The province has invested in technology and advanced manufacturing, a trend likely to persist for years. The new energy sector is performing strongly, including exports, a clear indication the effort developing this industry is starting to bear fruit. Meanwhile, Guangdong enterprises are linking up more closely with the regional supply chain and exploring opportunities in emerging markets. Hong Kong is expected to play a critical role in the GBA, bridging the demand for trade and finance in new markets.

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