The balance of risks facing Hong Kong’s economy is tilted to the downside, the IMF said in its annual assessment of the finance hub.
Risks to the economy include ongoing uncertainty linked to the COVID-19 pandemic, which could affect the flow of people and further weigh on consumption, the IMF said in its report. The Washington-based lender expects economic growth to slow to 3 percent this year from an estimated 6.4 percent last year.
Economists have started downgrading their forecasts for Hong Kong as strict virus control measures, including travel bans, curb tourism and retail spending in the territory.
Photo: EPA-EFE
Citigroup Inc this week also warned of rising prices and possibly shortages of some goods, airlines slash cargo flights into the hub.
Other downside risks highlighted by the IMF include a slower-than-expected global recovery, continued disruption of global supply chains, and deglobalization and decoupling that could reduce the flow of goods and derail the recovery, the report said.
“A sharp rise in global risk premia, a disorderly tightening in the monetary policy of major advanced economies, large housing market corrections, escalating US-China tensions, and a shift of market confidence in Hong Kong SAR’s status as a major international financial center could affect the flow of capital,” the IMF said.
The analysis comes as Hong Kong sticks to an aggressive strategy to control the virus.
A survey released this week by the American Chamber of Commerce in Hong Kong found that the territory’s stringent travel restrictions are now the biggest challenge for US businesses and expatriates, with 44 percent of respondents in a new survey saying they were likely to leave.
In its assessment, the IMF said ample policy buffers and a strong external position should help offset any adverse impact on Hong Kong’s financial stability and economic growth.
A quicker reopening of borders could drive a stronger recovery in private consumption, the IMF said.
“A faster-than-expected global recovery could contribute to stronger export growth than currently envisaged,” the IMF said, adding that the development of the Greater Bay Area could improve medium and long-term growth prospects.
On fiscal policy, the Hong Kong government should pursue a gradual return to a balanced budget and should focus on more targeted support.
“Fiscal policy should also address structural challenges of population aging, high income inequality, and insufficient public housing supply to promote inclusive growth,” the IMF said.
purpose: Tesla’s CEO sought to meet senior Chinese officials to discuss the rollout of its ‘full self-driving’ software in China and approval to transfer data they had collected Tesla Inc CEO Elon Musk arrived in Beijing yesterday on an unannounced visit, where he is expected to meet senior officials to discuss the rollout of "full self-driving" (FSD) software and permission to transfer data overseas, according to a person with knowledge of the matter. Chinese state media reported that he met Premier Li Qiang (李強) in Beijing, during which Li told Musk that Tesla's development in China could be regarded as a successful example of US-China economic and trade cooperation. Musk confirmed his meeting with the premier yesterday with a post on social media platform X. "Honored to meet with Premier Li
Dutch brewing company Heineken NV on Friday announced an investment of NT$13.5 billion (US$414.62 million) over the next five years in Taiwan. The first multinational brewing company to operate in Taiwan, Heineken made the statement at a ceremony held at its brewery in Pingtung County. It also outlined its efforts to make the brewery “net zero” by 2030. Heineken has been in the Taiwanese market for 20 years, Heineken Taiwan managing director Jeff Wu (吳建甫) said. With strong support from local consumers, the Dutch brewery decided to transition from sales to manufacturing in the country, Wu said. Heineken assumed majority ownership and management rights
ARTIFICIAL INTELLIGENCE: The chipmaker last month raised its capital spending by 28 percent for this year to NT$32 billion from a previous estimate of NT$25 billion Contract chipmaker Powerchip Semiconductor Manufacturing Corp (力積電子) yesterday launched a new 12-inch fab, tapping into advanced chip-on-wafer-on-substrate (CoWoS) packaging technology to support rising demand for artificial intelligence (AI) devices. Powerchip is to offer interposers, one of three parts in CoWoS packaging technology, with shipments scheduled for the second half of this year, Powerchip chairman Frank Huang (黃崇仁) told reporters on the sidelines of a fab inauguration ceremony in the Tongluo Science Park (銅鑼科學園區) in Miaoli County yesterday. “We are working with customers to supply CoWoS-related business, utilizing part of this new fab’s capacity,” Huang said, adding that Powerchip intended to bridge
Microsoft Corp yesterday said that it would create Thailand’s first data center region to boost cloud and artificial intelligence (AI) infrastructure, promising AI training to more than 100,000 people to develop tech. Bangkok is a key economic player in Southeast Asia, but it has lagged behind Indonesia and Singapore when it comes to the tech industry. Thailand has an “incredible opportunity to build a digital-first, AI-powered future,” Microsoft chairman and chief executive officer Satya Nadella said at an event in Bangkok. Data center regions are physical locations that store computing infrastructure, allowing secure and reliable access to cloud platforms. The global embrace of AI