Hong Kong Q3 GDP expands 4.1%; lowers growth forecast

HONG Kong’s economy expanded 4.1 per cent in the third quarter from a year earlier, beating growth of 1.5 per cent in the second quarter and 2.9 per cent in the first, the government said on Friday (Nov 10), adding that inbound tourism and private consumption would underpin growth for the rest of the year.

However, the authorities revised down the full-year economic growth forecast to 3.2 per cent from an earlier estimate of a 4 per cent to 5 per cent range. The economy shrank 3.5 per cent in 2022.

Adolph Leung, a government economist, said that private consumption, improvement in household income and the government’s support initiatives should bolster growth, while more visitors could be received as handling capacity recovers further. “The difficult external environment amid increasing geopolitical tensions and tight financial conditions would continue to weigh on exports of goods and investment and consumption sentiment.”

Visitor arrivals for September came to 2.77 million, bringing the total for the first nine months of 2023 to 23.32 million, based on preliminary data from the Hong Kong Tourism Board. The figures are a jump from last year’s 66,037 and 249,699, respectively, when China was still in the grip of Covid-19 restrictions.

“Although Hong Kong will see support from consumption, the net tourism outflows… and poor export performance will likely weigh on growth,” said Gary Ng, Asia-Pacific senior economist at Natixis.

Meanwhile, Financial Secretary Paul Chan told global financial leaders at an investment summit earlier this week that innovation and technology were also core engines to drive growth.

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Hong Kong financial chief revises down this year's GDP growth to more than 3%

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On a seasonally adjusted quarterly basis, the economy grew 0.1 per cent in the July-to-September period. That compared with a 1.3 per cent slide in the April-to-June quarter and 5.4 per cent growth in the first.

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 DBS economist Samuel Tse. “After all, a solid recovery of asset markets and economy hinges crucially on a clear timeline of interest rates cuts.”

Hong Kong lowered its full-year underlying consumer price inflation forecast to 1.8 per cent from 2 per cent, and lowered its forecast for the headline rate to 2.2 per cent from 2.4 per cent.