After a near-certain contraction last year for the third time since 2019, Hong Kong’s economy is coming back stronger this year and might even grow faster than rival financial hub Singapore for the first time in more than a decade.
Economists are upgrading their forecasts for Hong Kong this year as the city accelerates its reopening with China and the rest of the world.
The median estimate in a Bloomberg survey of 12 economists last week was 3.3 percent growth for this year, higher than the 2.7 percent forecast in a survey of 25 economists in November last year.
Photo: AP
Analysts are becoming more optimistic as Hong Kong sheds its remaining COVID-19 curbs and rolls out a plan to allow people to more freely cross the border to China again.
China on Sunday ended quarantine for arrivals, making cross-border travel a reality again for many people.
An influx of arrivals would be good news for the territory, and could revive businesses that have been hurt by the closure, from hotel and catering companies to investment and wealth management firms.
“We see Hong Kong turning the corner, but the real effects are likely to be seen only in the second half of 2023,” Moody’s Analytics economist Heron Lim (林師順) said.
He expected Hong Kong’s GDP to expand 3.8 percent this year, compared with a November estimate of 3.2 percent.
Lim said quarterly growth could reach 7.7 percent in the October-to-December period.
Hong Kong officials have said they think GDP shrank 3.2 percent last year.
Growth in trade-reliant Singapore is projected to level off this year as the US and Europe head for likely recessions, with the most recent estimate in a Bloomberg survey showing the city-state would expand 2 percent after expanding 3.8 percent last year.
If Hong Kong grows at a faster pace, it would surpass Singapore for the first time since 2008.
Economists who participated in the most recent Hong Kong survey expect the city to turn to fiscal support and other measures to shore up growth this year.
Three respondents said they thought officials would issue more consumption vouchers worth HKD$5,000 (US$640) per person to spur spending, while seven people said either personal or corporate tax cuts could be on the table.
Respondents were allowed to select more than one option.
Even as Hong Kong reopens — to China and the rest of the world — its problems could be hard to fix. The years of isolation cost Hong Kong’s economy an estimated US$27 billion in potential growth, analysis by Natixis SA said.
The city’s property market — the world’s least affordable — is also under strain as interest rates rise and housing demand slides, while global headwinds including weak demand and an impending worldwide recession are adding to the territory’s woes.
“China’s reopening is helpful, but it will not solve all problems Hong Kong has right now,” Natixis senior economist Gary Ng (吳卓殷) said.
He projected growth of 3 percent for this year, slightly below the median estimate.
“As higher interest rates and global slowdown kick in this year, the city’s economic prospect is only cautiously optimistic with short-term pressure,” he said.
Nissan Motor Co has agreed to sell its global headquarters in Yokohama for ￥97 billion (US$630 million) to a group sponsored by Taiwanese autoparts maker Minth Group (敏實集團), as the struggling automaker seeks to shore up its financial position. The acquisition is led by a special purchase company managed by KJR Management Ltd, a Japanese real-estate unit of private equity giant KKR & Co, people familiar with the matter said. KJR said it would act as asset manager together with Mizuho Real Estate Management Co. Nissan is undergoing a broad cost-cutting campaign by eliminating jobs and shuttering plants as it grapples
TEMPORARY TRUCE: China has made concessions to ease rare earth trade controls, among others, while Washington holds fire on a 100% tariff on all Chinese goods China is effectively suspending implementation of additional export controls on rare earth metals and terminating investigations targeting US companies in the semiconductor supply chain, the White House announced. The White House on Saturday issued a fact sheet outlining some details of the trade pact agreed to earlier in the week by US President Donald Trump and Chinese President Xi Jinping (習近平) that aimed to ease tensions between the world’s two largest economies. Under the deal, China is to issue general licenses valid for exports of rare earths, gallium, germanium, antimony and graphite “for the benefit of US end users and their suppliers
Dutch chipmaker Nexperia BV’s China unit yesterday said that it had established sufficient inventories of finished goods and works-in-progress, and that its supply chain remained secure and stable after its parent halted wafer supplies. The Dutch company suspended supplies of wafers to its Chinese assembly plant a week ago, calling it “a direct consequence of the local management’s recent failure to comply with the agreed contractual payment terms,” Reuters reported on Friday last week. Its China unit called Nexperia’s suspension “unilateral” and “extremely irresponsible,” adding that the Dutch parent’s claim about contractual payment was “misleading and highly deceptive,” according to a statement
The Chinese government has issued guidance requiring new data center projects that have received any state funds to only use domestically made artificial intelligence (AI) chips, two sources familiar with the matter told Reuters. In recent weeks, Chinese regulatory authorities have ordered such data centers that are less than 30 percent complete to remove all installed foreign chips, or cancel plans to purchase them, while projects in a more advanced stage would be decided on a case-by-case basis, the sources said. The move could represent one of China’s most aggressive steps yet to eliminate foreign technology from its critical infrastructure amid a
RSS