Hong Kong Economic Forecast

Hong Kong Economic Outlook

June 21, 2022

After shrinking at the sharpest pace since 2020 in Q1 2022 due to soaring Covid-19 cases and tough ensuing restrictions, the economy is enjoying a strong rebound in Q2. Covid-19 cases have tumbled since their March peak, allowing for the progressive rollback of restrictions, and the distribution of HKD 5,000 (around USD 635) consumption vouchers to citizens in April is further aiding private spending. Looking at available indicators, retail sales surged year on year in April, while the private-sector PMI rose to an over decade-high in May. However, ongoing quarantine requirements continue to hamper tourism and the city’s international competitiveness. Moreover, in mid-June, testing requirements were reintroduced for entry to bars and clubs in response to a slight uptick in cases, raising the specter of a broader snapback of restrictions ahead.

Hong Kong Economic Growth

GDP growth will be tepid this year due to the impact of the pandemic at home and in mainland China. That said, government stimulus spending should provide some support, with a second batch of consumption vouchers to be issued in August. A more restrictive political environment and lingering Covid-19 measures pose risks to long-term competitiveness and investment. The FocusEconomics panel projects the economy to grow 1.0% in 2022, which is down 0.1 percentage points from the previous month’s forecast. In 2023, the panel sees growth at 3.8%.

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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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