HK’s Economic Growth Raises Concerns for Post-Pandemic Recovery
November 01, 2023
Hong Kong’s economy experienced slower growth than anticipated in the third quarter of this year, signalling that the post-pandemic recovery of the Asian financial hub may be losing momentum.
According to advance estimates released by the government on Tuesday, the gross domestic product (GDP) rose by 4.1% from a year earlier in the July to September period. Although this figure exceeded the second quarter’s 1.5% pickup, it fell short of economists' expectations of 5.2%.
The growth rate in Q3 benefited from a low base last year when GDP plummeted by 4.5% due to the continued impact of the pandemic on the financial hub. However, the current lower-than-expected growth underscores the persistent challenges that Hong Kong faces, despite the gradual recovery in tourism since the city reopened its borders earlier this year.
A government spokesperson stated that inbound tourism and private consumption are expected to be the key drivers of economic growth for the remainder of the year. The spokesperson also acknowledges the difficult external environment, characterized by escalating geopolitical tensions and tight financial conditions, which are likely to weigh on exports, investment, and consumption sentiment.
The modest recovery in Hong Kong's economy raises questions about the effectiveness of the government's efforts to stimulate consumption, including initiatives such as the 'Night Vibes Hong Kong' campaign. Chief Executive John Lee acknowledged the challenging global environment in his recent policy address and implemented tax cuts on property purchases and stock trades.
Additionally, Lee aims to attract businesses and talent to the city to maintain Hong Kong’s position as a premier financial hub in Asia, competing against rivals like Singapore. To address the long-term threat of an aging population, Lee has introduced measures such as a one-time baby bonus of HK$20,000 (HK$2,556) for new parents.
Economists surveyed by Bloomberg predicts a 4% growth rate for Hong Kong’s economy this year. The government is set to release the final GDP figures on November 10, providing a comprehensive view of the current economic situation in the city.
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