Hong Kong’s economy would next year grow slower than previously expected, as the territory struggles to dig itself out of a likely deep contraction this year, economists said.
GDP is projected to grow 2.7 percent next year, a Bloomberg survey of economists showed.
That is down from an estimate in an August poll of 3.5 percent growth.
Photo: AFP
The revision came as economists also slashed their expectations for this year.
GDP is now expected to decline 3 percent this year, substantially lower than the previous survey, which saw it remaining unchanged.
The new forecast is about in line with the Hong Kong government’s revised estimate issued last week, when officials said they expect a 3.2 percent contraction from a year earlier.
Photo: EPA-EFE
For the fourth quarter of this year alone, the economy is expected to shrink 2.4 percent, far worse than the 2.9 percent expansion forecast in the previous survey.
The downgrades reflect the numerous headwinds Hong Kong has been grappling with, including rising global and local interest rates, weakened trade, the territory’s slow emergence from years of isolation amid the COVID-19 pandemic and China’s precarious economic situation.
The territory last month reported that GDP dropped in the third quarter a surprising 4.5 percent, well below expectations.
In a separate survey of six economists, half of the respondents chose the expectation that a prolonged exit from China’s “zero COVID-19” policy as the biggest downside risk for Hong Kong’s economy, while others selected the global slowdown and tightening financial conditions.
“While the city is reopening, we think the boost in activity will struggle to offset immense headwinds from weakening external demand, rising interest rates, falling housing prices, and a likely withdrawal of fiscal transfers to households next year,” Oxford Economics Ltd economist Lloyd Chan said.
Chan, who saw global tightening as the biggest risk to Hong Kong’s outlook, cut his growth forecast for this year to a 3 percent contraction from an 0.8 percent fall.
He downgraded next year’s projection to 1.4 percent growth from 3 percent growth.
A delayed reopening for mainland China “means a delay in the recovery in Hong Kong’s retail and tourism sectors,” Commerzbank AG senior economist Tommy Wu (胡東安) said.
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