Hong Kong economic growth slows to 1.5% in Q2; gradual recovery seen
HONG Kong’s economy grew 1.5 per cent in the second quarter from a year ago, slowing from 2.9 per cent in Q1 as demand for exports weakened and investment spending fell, official seasonally-adjusted data showed on Friday (Aug 11).
The Q2 figure was the same as preliminary estimate made in July, when the Q1 figure was revised.
Hong Kong has now posted two consecutive quarters of growth, but is expanding more slowly than the 3.6 per cent year-on-year forecast by economists polled by Reuters.
The government has revised its growth forecast for this year to 4 per cent to 5 per cent, from a range of 3.5 per cent to 5.5 per cent earlier.
The economy shrank 3.5 per cent in 2022.
Adolph Leung, a government economist, said in a statement that the difficult global economic environment would continue to weigh on exports, but “inbound tourism and private consumption will remain the major drivers of economic growth for the rest of the year”.
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“Improved labour market conditions and the government’s various measures that boost the momentum of the recovery will provide additional support to private consumption,” Leung said, while noting that financial conditions remain tight.
Boosted by travel from the mainland and South-east Asia, preliminary visitor arrivals for July increased 31 per cent from June to 3.6 million.
“Hong Kong’s tourism industry is recovering gradually,” said Dane Cheng, executive director of the Hong Kong Tourism Board (HKTB). The city saw more than 16 million visitors for the first seven months of 2023, according to HKTB.
On a quarterly basis, the economy shrank 1.3 per cent in Q2, the biggest contraction since Q3 of 2022 when it shrank 2.5 per cent.
Hong Kong’s economy grew 5.4 per cent in the March quarter over the previous quarter.
A challenging external environment may bring downside risks for Hong Kong, with exports continuing to be under pressure amid weak demand from mainland China and globally, said Samuel Tse, an economist at DBS.
“A high interest rate environment is also negatively affecting investment sentiment, particularly in the property sector,” Tse added.
Hong Kong lowered its full-year underlying consumer price inflation forecast to 2.0 per cent from 2.5 per cent, and cut its forecast for the headline rate to 2.4 per cent from 2.9 per cent. REUTERS
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