HK expects 2021 growth near top of forecast range

Hong Kong

HONG Kong's economy will likely expand near the top of the government's forecast range this year, with inflation pressures expected to ease.

Gross domestic product (GDP) is set to grow 6.4 per cent this year, close to the upper end of a previous range of 5.5 to 6.5 per cent, the city's government said in a release on Friday (Nov 12).

The forecast for underlying inflation this year was lowered to 0.7 per cent, from 1 per cent. The outlook comes amid mounting headwinds to the economy's recovery as the government sticks to its Covid-zero strategy in order to reopen borders to the mainland, while restricting most other tourists. The government maintained its year-on-year GDP growth estimate for the third quarter at 5.4 per cent, and 0.1 per cent on a quarter-on-quarter basis.

Growth momentum in the city has slowed, with the city's Covid-zero status raising questions about its future as a global financial hub.

Foreign business leaders including the European and American chambers of commerce have expressed mounting frustration with the lack of progress on loosening quarantine rules that have severely restricted overseas travel.

Hong Kong Chief Executive Carrie Lam has repeatedly insisted the first priority is reopening access to mainland China.

While an electronic cash voucher program distributing HK$5,000 (S$868.5) to eligible residents has given a boost to local consumption in the quarter, the effects of the one-time program will fade over time as key revenue from international tourism and travel remains largely absent. BLOOMBERG