Hong Kong Economic Forecast

Hong Kong Economic Outlook

December 13, 2019

The 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 Growth

The 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%.

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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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