John Lee, the head of the Asian Financial Centre, announced unexpectedly before the formal publication of the data on Tuesday that Hong Kong’s GDP expanded by 2.7% in the first quarter of 2023, ending four straight quarters of recession.
Even though exports decreased in the first quarter, Lee predicted that faster economic growth on the Chinese mainland and increased aviation capacity in Hong Kong would give the economy even more support.
“Economic growth in the second quarter will be better than the first quarter,” he told a regular news briefing. “The economy this year will be better than last year.”
Before the data was to be released at the planned time of 08:30 GMT, Lee, the chief executive of Hong Kong, remarked that the most recent quarterly number contrasted with a contraction of 4.1% in the previous quarter.
Barclays economists had predicted a 0.9% decline in Q1 GDP, whilst Natixis and Hang Seng Bank economists had predicted growth of 1.1% and 2.5%, respectively.
According to official data that supported Lee’s earlier estimate, the economy increased 5.3% on a seasonally adjusted quarterly basis from January through March.
As per the government, domestic demand and inbound tourism will continue to be the key forces behind economic growth this year, and visitor arrivals should increase as transportation and handling capacity continue to catch up.
“The improving economic situation and prospects should boost domestic demand, though tight financial conditions will remain a constraint,” a government spokesman said.
Hong Kong’s economy is anticipated to benefit this year from recovering consumer spending on the mainland and a resurgence in travel, which will help the territory recover from pandemic measures it implemented as well as the effects of China’s strict “zero-COVID” policy.
All pandemic restrictions have been eliminated in the formerly British colony, where Lee has made increasing international competitiveness and luring more talent from abroad a top goal.
“Incoming data pointed to a recovery in the tourism and retail sectors, supporting the Hong Kong economy to return to the path of expansion for the year,” said Thomas Shik, chief economist at Hang Seng Bank.
“That said, the relatively weak trade performance suggested that a global slowdown continued to pose challenges to the growth outlook.”
Due to rising borrowing rates and a gloomy economic outlook, Hong Kong is likewise in danger from high inflation and forceful monetary tightening in advanced nations.
According to Financial Secretary Paul Chan, the country’s GDP will expand by 3.5% to 5.5% this year after contracting by 3.5% in 2022.
Between 3% and 6.5% is the range of growth predicted by Barclays, Hang Seng Bank, DBS, Natixis, and Standard Chartered for Hong Kong’s GDP in 2023.
“Hong Kong’s economy is set to embrace a cyclical rebound of better household spending and China’s re-opening,” said Gary Ng, senior economist at Natixis Corporate and Investment Bank.
“However, the pressure from external trade and investment may continue to linger in the short run due to the downturn in the tech cycle and high-interest rates.”
- Published By Team Hongkong Journalist