Hong Kong Economic Forecast

Hong Kong Economic Outlook

November 17, 2020

The economy performed better than expected in Q3, as the annual contraction softened to a year-to-date low, while activity rebounded strongly on a quarter-on-quarter basis. The improvement was chiefly driven by healthier domestic demand. Despite contracting again, private consumption and investment activity showed signs of recovery in Q3 amid the gradual easing of social distancing measures in September and as fiscal stimulus measures fully kicked in. Similarly, exports fell at a softer pace in Q3, hinting at recovering foreign demand. Turning to Q4, the PMI jumped in October, pointing to a continued improvement in private sector conditions. In other news, a resolution to dismiss politicians deemed a threat to national security passed by Beijing on 11 November prompted the mass resignation of all remaining pro-democracy lawmakers in Hong Kong, further ratcheting up tensions over the future of the territory and boding ill for business environment in turn.

Hong Kong Economic Growth

GDP is expected to rebound next year, emerging from a two-year recession triggered by political unrest and Covid-19. A gradual recovery in domestic demand should spearhead the rebound, with firmer growth in mainland China further solidifying the momentum. That said, uncertainty over the political situation and the course of the pandemic clouds the outlook. FocusEconomics panel projects the economy to rebound and grow 4.6% in 2021, which is up 0.4 percentage points from the previous month’s forecast. In 2022, the panel sees growth moderating to 2.9%.

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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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