Hong Kong Economic Forecast

Hong Kong Economic Outlook

May 26, 2020

The economy contracted at the sharpest pace on record in the first quarter. Private consumption plummeted at a double-digit rate, fixed investment declined markedly, while exports tumbled at the quickest clip in 11 years. Turning to the second quarter, the economy will be continuing to deteriorate despite an easing of lockdown measures in May and fiscal stimulus worth roughly 10% of GDP. In April, the manufacturing PMI remained deep in contractionary territory, while the unemployment rate spiked to the highest level since October 2009. Exacerbating matters, the possibility of last year’s pro-democracy protests returning could spell more trouble for the economy. On 21 May, China’s government proposed a controversial new national security legislation, which would give mainland intelligence officers enforcement powers that some analysts say could jeopardize rights and freedoms of Hong Kong citizens.

Hong Kong Economic Growth

The economy will likely contract this year at the steepest rate on record, as the lockdown and weaker growth in mainland China weigh on activity. Nevertheless, strong fiscal stimulus should support a partial recovery in H2 this year. Our panel projects the economy will contract 4.9% in 2020, which is down 1.1 percentage points from last month’s forecast. Moving to 2021, the panel sees the economy growing 4.0%.

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Hong Kong Facts

Value Change Date
Bond Yield1.823.38 %Dec 31
Exchange Rate7.79-0.11 %Jan 01

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