Hong Kong is set to end the year in the midst of a full-blown recession, its finance chief said yesterday, as spiraling interest rates join strict COVID-19 controls in hammering the economy.
“There is a very high chance for Hong Kong to record a negative GDP growth for this year,” Hong Kong Financial Secretary Paul Chan (陳茂波) told reporters, adding that interest rates were being raised “at a pace that was never seen in the past three decades.”
Hong Kong’s monetary policy moves with the US Federal Reserve because its currency, one of the cornerstones of its business hub reputation, is pegged to the US dollar.
Photo: AFP
The Fed’s hawkish rate hikes, aimed at curbing soaring inflation, come at an especially difficult time for Hong Kong, dampening sentiment when the economy is struggling.
Hong Kong is currently in a technical recession — recording two consecutive quarters of negative growth this year.
The government has adhered to a version of China’s “zero COVID” policy for more than two-and-a-half years, enforcing strict controls and mandatory quarantine for international arrivals.
Chan signaled his support for making travel and business easier.
“The aspects related to the pandemic need to continue to improve in order for us to see larger investments, because people are more cautious in a high-interest-rates environment,” he said.
Business leaders have long been warning that the COVID-19 controls, combined with Beijing’s ongoing crackdown on dissent, have made it harder to attract talent and cut off Hong Kong internationally, especially as rivals reopen.
Hong Kong has seen a net outflow of more than 200,000 people in the past two years, a record population drop.
“Hong Kong should be ahead of other Asian cities, but now there’s a feeling that we’re falling behind and being left isolated,” Eden Woon (翁以登), the new head of the Hong Kong American Chamber of Commerce told the South China Morning Post in an article published yesterday.
“There are people leaving and the problems of retaining talent — all these things add up together and need to be addressed,” he added.
While the Hong Kong Monetary Authority has no choice but to follow the Fed, major banks such as Standard Chartered PLC and HSBC Holdings PLC had resisted that pressure.
However, HSBC yesterday raised its prime lending rate in Hong Kong by 12.5 basis points to 5.125 percent, the bank’s first rise in four years.
Others are likely to follow suit. That could affect the territory’s once hot property sector, with Goldman Sachs Group Inc estimating that prices could slide by about 20 percent over the next four years.
Hong Kong also experienced a recession in 2019 when months of huge and sometimes violent democracy protests rocked the business district.
Taiwan’s foreign exchange reserves fell below the US$600 billion mark at the end of last month, with the central bank reporting a total of US$596.89 billion — a decline of US$8.6 billion from February — ending a three-month streak of increases. The central bank attributed the drop to a combination of factors such as outflows by foreign institutional investors, currency fluctuations and its own market interventions. “The large-scale outflows disrupted the balance of supply and demand in the foreign exchange market, prompting the central bank to intervene repeatedly by selling US dollars to stabilize the local currency,” Department of Foreign
Intel Corp is joining Elon Musk’s long-shot effort to develop semiconductors for Tesla Inc, Space Exploration Technologies Corp and xAI, marking a surprising twist in the chipmaker’s comeback bid. Intel would help the Terafab project “refactor” the technology in a chip factory, the company said on Tuesday in a post on X, Musk’s social media platform. That is a stage in the development process that typically helps make chips more powerful or reliable. The chipmaker’s shares jumped 4.2 percent to US$52.91 in New York trading on Tuesday. The Terafab project is a grand plan by Musk to eventually manufacture his own chips for
Taiwan Power Co (Taipower, 台電) yesterday said it plans to resume operations at two coal-fired power generators for three months to boost security of electricity supply as liquefied natural gas (LNG) supply risks are running high due to the Middle East conflict. The two coal-fired power generators are at Mailiao Power Plant in Yunlin County’s Mailiao Township (麥寮). The plant, operated by Formosa Plastics Group (台塑集團), supplied electricity to Taipower’s power grid until the end of last year. Taipower’s decision came about one month after Minister of Economic Affairs Kung Ming-hsin (龔明鑫) on March 10 said that the nation had no imminent
Some robotaxi passengers were left stranded in the middle of fast-moving traffic in a major Chinese city after their driverless vehicles stopped running, according to police and media reports on Wednesday. A preliminary investigation indicates more than 100 robotaxis came to a halt because of a “system malfunction,” police in the city of Wuhan said in a statement, without elaborating. No injuries were reported. One passenger told Chinese media that their robotaxi stopped after turning a corner. An instruction on a screen read: “Driving system malfunction. Staff are expected to arrive in 5 minutes.” After no one showed up, the passenger pushed
RSS