Hong Kong Economic Outlook
August 25, 2020GDP declined severely in Q2, after contracting at the steepest pace on record in Q1. The unemployment rate rose to its highest level since Q4 2004 in Q2, while retail sales plummeted by nearly a third in the same period. As a result, private consumption declined at the fastest pace on record in Q2. Moreover, fixed investment dived at the sharpest pace in over two decades, while exports continued to fall. Turning to Q3, a high unemployment rate and the declining PMI point to sustained deterioration in the labor market and business conditions. On the political front, the anti-subversion law imposed by China in June is stoking major economic uncertainty. Consequently, the U.S. sanctioned some government officials and suspended economic privileges under the Hong Kong Policy Act on 7 August. The possibility of further sanctions poses a significant risk to business investment going forward.
Hong Kong Economic GrowthThe economy is expected to decline this year at one of the sharpest rates on record amid the constraining effects of lockdown measures and as weaker growth in mainland China weighs on activity. Moreover, the recent anti-subversion law should weigh heavily on business investment. Nevertheless, strong fiscal stimulus should support a partial recovery in H2. Our panel projects the economy will contract 6.4% in 2020, which is down 0.8 percentage points from last month’s forecast. In 2021, the panel sees the economy growing 4.3%.
Hong Kong Economy Data
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|Bond Yield||1.82||3.38 %||Dec 31|
|Exchange Rate||7.79||-0.11 %||Jan 01|
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Hong Kong Economic News
September 3, 2020
The IHS Markit Hong Kong SAR Purchasing Managers’ Index (PMI) edged down to 44.0 in August, from 44.5 in July.
September 1, 2020
Retail sales fell 23.9% compared to the same month a year earlier in July, which was slightly softer than June’s 25.3% decrease.
August 20, 2020
Consumer prices dropped a seasonally-adjusted 1.00% over the previous month in July, after flatlining in June.
August 5, 2020
The IHS Markit Hong Kong SAR Purchasing Managers’ Index (PMI) fell to 44.5 in July, after rising to 49.6 in June from 43.9 in May.
July 30, 2020
Retail sales fell 25.4% compared to the same month a year earlier in June, which was markedly softer than May's 34.0% decrease.