Hong Kong's growth slows as Omicron outbreak weighs on economy

[HONG KONG] Hong Kong's economic growth slowed in the fourth quarter, with the city facing mounting risks in coming months as it struggles to bring an Omicron wave under control.

Gross domestic product expanded 4.8 per cent last quarter from a year earlier, weaker than the 5 per cent median estimate in a Bloomberg survey of 12 economists, according to advanced estimates released by the government on Friday.

Full-year growth was 6.4 per cent, compared with a median estimate of 6.6 per cent, the first annual expansion after two straight years of contraction.

Heading into this year, a raft of virus measures have worsened the outlook for an economy that had been poised to return to pre-pandemic levels of activity.

Recent moves include a ban on dining in restaurants - now extended until Feb 17 - travel restrictions and the culling of thousands of pets.

A delayed reopening with China was a key driver behind economist downgrades for the city's growth outlook, given its reliance on tourists from the mainland.

Consumption vouchers in the latter part of last year helped to spur spending and lift economic growth. The first disbursement, in August, saw retail sales that month jump to 11.9 per cent on-year, from 2.8 per cent the previous month.

The second distribution, in October, also fuelled a rise to double-digit growth. Entrepreneurs and politicians have called for a fresh round of consumption vouchers.

Finance Secretary Paul Chan has said the upcoming budget on Feb 23 will provide a balance between offering support for those affected by the pandemic and boosting the economy.

Samuel Tse, an economist at DBS Group Holdings in Hong Kong, said stronger stimulus is expected in the budget as a fifth round of relief measures, announced this month, was only 1.1 per cent of total stimulus since 2020. BLOOMBERG