Hong Kong Economic Forecast

Hong Kong Economic Outlook

July 16, 2019

The economy seems to have remained downbeat in the second quarter, despite strengthening from Q1’s near one-decade low growth reading. The private sector PMI edged up from May’s near three-year low in June but remained in contraction, while retail sales contracted for the fourth month running in May. Meanwhile, though U.S.-China trade negotiations restarted on 29 June, the dispute could still escalate and looks set to drag on the economy at least until year-end. On the political front, recent large-scale protests against a proposed bill allowing extradition to China morphed into a broader pro-democracy uprising despite the bill being declared “dead” by Chief Executive Carrie Lam. Beijing has reportedly refused Lam’s resignation, making her a likely lame duck for the remainder of her tenure. The uncertainty and unrest are poised to hurt business and consumer sentiment.

Hong Kong Economic Growth

Growth will likely decelerate this year due to the mainland’s slowdown and the shadow cast by the trade war with the U.S. Despite a recent truce, tensions could still escalate by year-end, while recent civil unrest could deter private investment. On the flipside, a tight labor market and likely interest rate cuts from the Fed should support domestic demand.  Our panel expects growth of 2.0% in 2019, which is down 0.2 percentage points from last month’s forecast, and 2.3% in 2020.

Hong Kong Economy Data

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Hong Kong Facts

ValueChangeDate
Bond Yield1.633.38 %Jul 11
Exchange Rate7.82-0.11 %Jul 11
Stock Market28,432-1.92 %Jul 11

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