GBA business activity rises with broad-based gains in Q1 index

GBA business activity rises with broad-based gains in Q1 index

The GBA Business Confidence Index (GBAI) current performance index for business activity rose to 53.5 in Q1 from 50.7 in the previous quarter, the highest since Q2 2024, Standard Chartered reported.

According to the report, six of the eight index components rose QoQ, and all previous sub-50 underperformers rallied back above the neutral mark, namely capacity utilisation (+3.2pts), raw material inventory (+9.0pts), financing scale (+3.2pts), and profits (+3.1pts).

The GBAI “expectations” index for business activity also improved to 54.3 in Q1 from 52.9 in Q4 2024 with seven of eight expectation sub-indices rising QoQ, led by a 3.1 percentage point increase in profits and a 2.8 percentage point increase in raw material inventory.

In addition, all the city sub-indices aside from Shenzhen recorded QoQ growth.

Looking ahead, 41% of GBA firms saw a positive impact from the consumption boosting initiatives announced by China in January. Meanwhile, 38% said the consumer goods trade-in programme would bring a positive impact on their business.

Majority of GBA firms also agreed that the government could relax market access for private sector and foreign investment to help boost services consumption.

“Given the urgency to stabilise market sentiment following the tariff-induced sell-off, the likelihood of China cutting the reserve requirement ratio and/or policy rate (7-day reverse repo rate) in April has materially increased. We expect that both monetary and fiscal policies on the Mainland will stay supportive. Meanwhile, Hong Kong would need to ramp up short-term support to SMEs and continue to diversify its trade to facilitate more non-US trade corridors,” Kelvin Lau, senior economist at Standard Chartered Greater China and North Asia said.

The GBAI surveyed over 1,000 companies in the GBA from February to March.