Hong Kong expects growth to slow as sluggish demand weighs
HONG Kong revised growth expectations to the lowest end of its previous forecast, showing mounting pressures from weaknesses in exports and consumption.
The city changed its 2024 growth forecast to 2.5 per cent from a range of 2.5 to 3.5 per cent estimated in August, the Census and Statistics Department said on Friday (Nov 15). The adjustment suggests expansion will slow from last year’s 3.3 per cent and came after data showed growth slowed to the weakest in five quarters.
The revision underscored both external and domestic challenges confronting the Asia financial hub. Hong Kong’s economy has struggled with a property downturn that’s sapped consumer confidence and spending, while geopolitical tensions have weighed on commerce in the port city. China’s slowdown has directly hit businesses and tourism in the city, with visitor numbers trailing pre-pandemic levels.
“Increased global economic uncertainties and escalation of trade conflicts would affect the performance of our goods exports,” government economist Adolph Leung said in a statement.
Gross domestic product expanded 1.8 per cent in the three months ended September from the same period last year, according to the government, confirming an advance estimate released last month.
The government also cut its forecast for headline inflation for 2024 to 1.7 per cent from 1.9 per cent.
The data capture the period ahead of Chief Executive John Lee’s announcement of a raft of new measures to shore up the economy and largely before China unveiled its boldest stimulus steps since the pandemic in late September. Economic indicators released on Friday showed China entered the fourth quarter with a more balanced economy, with retail sales expanding at the fastest in eight months in October.
The Hong Kong government expects monetary easing by the Federal Reserve, in addition to China’s stimulus efforts, to support sentiment. The city’s de facto central bank follows the Fed’s decisions as Hong Kong has a currency peg to the greenback.
The Hong Kong Monetary Authority cut its base interest rate last week after the Fed eased policy. While the trim may help lower borrowing costs, relief may be limited as the risks of potentially inflationary policies in the US under Donald Trump are set to pare back the easing path. BLOOMBERG
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