Hong Kong Economic Outlook
December 13, 2019The economy declined notably in the third quarter, as widespread protests undercut domestic demand. Private consumption and fixed investment nosedived, while exports were also down markedly. Turning to the fourth quarter, economic conditions likely remain anemic. The private sector PMI continued to freefall in November as business activity fell at the sharpest pace on record. Moreover, in October, retail sales plummeted to an all-time low; tourist arrivals continued to tumble; and unemployment ticked up to the highest rate since September 2017—boding poorly for household spending. In politics, an overwhelming majority of pro-democracy candidates were elected in the local district council elections in late November. On 4 December, the IMF concluded its Article IV visit. The Fund recommended a notable increase in fiscal stimulus to counter the downturn, mainly by addressing housing supply and income inequality.
Hong Kong Economic GrowthThe economy is seen recovering next year on a favorable base effect and some support from fiscal stimulus. However, activity is set to remain weak, as political turmoil will likely continue weighing on domestic activity. A further deterioration of the domestic situation and the U.S.-China trade war are the key downside risks. Our panel expects growth of 0.3% in 2020, which is down 0.4 percentage points from last month’s forecast. Moving to 2021, the panel projects the economy to grow 2.4%.
Hong Kong Economy Data
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Hong Kong Facts
|Bond Yield||1.82||3.38 %||Dec 31|
|Exchange Rate||7.79||-0.11 %||Jan 01|
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Hong Kong Economic News
January 21, 2020
Inflation ticked down to 2.9% in December from 3.0% in November.
January 6, 2020
The IHS Markit Purchasing Managers’ Index (PMI) picked up to 42.1 in December (November: 38.5), but remained well below the 50-threhold that indicates an improvement in the private sector economy over the previous month.
January 3, 2020
Retail sales by volume plummeted 25.4% year-on-year in November, slightly less steep than October’s revised 26.4% plummet (previously reported: -26.2% year-on-year).
December 20, 2019
Inflation ticked down to 3.0% in November from 3.1% in October.
December 5, 2019
The revised GDP reading confirmed the economy contracted at the sharpest pace since June 2009 in the third quarter, as Hong Kong faced the double whammy of mass protests battering domestic demand and the U.S.-China trade war hampering the external sector.