An economist on Thursday said Donald Trump's return to the White House will add uncertainty to the local economy even as confidence among small and medium-sized enterprises (SMEs) improved in the fourth quarter. According to research conducted by the Productivity Council and Standard Chartered Bank, the Standard Chartered Hong Kong SME Leading Business Index rose 3.2 points to 45.7 points for the October-to-December period from the previous three months. It's below the 52.8 reading in the second quarter of 2023, the highest in recent years. Figures below 50 indicate a negative outlook, and those above 50 a positive one. Speaking at a press briefing, Kelvin Lau, a senior economist from Standard Chartered Bank, said local businesses are expected to be cautious moving forward over concerns that Trump may raise tariffs on Chinese goods, which could have an impact on Hong Kong. "If Trump starts talking about much more milder tariff hikes to begin with, we think that it could actually be not as bad of a news for a lot of the SMEs who have been expecting the worst," he added. "So I think overall, we are looking at more subdued SME index performance, more cautiousness, prolonged cautiousness, but nothing more substantially worse than where we are now." Lau also said Hong Kong's economy is on track towards recovery, but the pace is slower than what the market expects.
