Hong Kong’s economic growth slowed in second quarter, Paul Chan says

HONG Kong is likely to report the economy grew at a slower pace in the second quarter than the previous three months, Financial Secretary Paul Chan said, as a spending boom that helped the city exit recession begins to run out of steam.

Chan’s projection, made in a blog post on Sunday (Jul 30), came ahead of the release of official gross domestic product data on Monday. Economists had forecast the government’s data would show an acceleration in GDP growth to 3.5 per cent on a year-on-year basis, up from 2.7 per cent in the first quarter.

Chan said the year-on-year growth rate “may be slightly slower” than the first three months of the year, although the economy was still on track to improve this year, as consumer spending continues to pick up and the external environment gradually improves.

The city is starting to recover after years of pandemic controls hammered the economy and spurred an exodus of residents. The economy emerged from recession in the first quarter after borders were reopened and spending increased.

Chan said consumer habits of residents have changed after three years of pandemic controls, which could affect the outlook. Residents have reduced their spending in the evening, and neighbouring Shenzhen has emerged as a popular tourist and shopping destination, he said.

Economists predict GDP growth slowed to 0.9 per cent on a quarter-on-quarter basis, from 5.3 per cent in the first quarter. BLOOMBERG