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Hong Kong Economic Forecast

Hong Kong Economic Outlook

The economy performed worse than markets had expected in Q2, with GDP growth slowing year on year and contracting quarter on quarter. The year-on-year slowdown came on the back of weaker momentum in private consumption, government spending and fixed investment. Turning to Q3, the economy should pick up in year-on-year and sequential terms on favorable base effects, the tourism recovery, a smaller negative contribution to GDP from inventories and the disbursement of consumption vouchers to residents in July. That said, weak mainland Chinese demand and tight financial conditions are likely keeping a lid on momentum. Looking at available data, retail sales rose by double digits year on year in July, and visitor arrivals in July–August were 68% of their 2018 level, up from just 18% in Q2. However, the PMI pointed to weak private-sector operating conditions in July–August.

Hong Kong Inflation

Inflation ticked down to 1.8% in July, following June’s 1.9%. July’s result represented the lowest inflation rate since March. The downtick was driven by lower inflation for food and utilities. Inflation is forecast to average slightly above 2% in H2 on the back of an uptick in global energy prices.

This chart displays Economic Growth (GDP, annual variation in %) for Hong Kong from 2013 to 2022.

Hong Kong Economic Data

2018 2019 2020 2021 2022
Population (million) 7.5 7.5 7.4 7.4 7.3
GDP (USD bn) 362 363 345 369 360
GDP per capita (USD) 48,314 48,280 46,451 49,842 49,077
GDP (HKD bn) 2,835 2,845 2,676 2,868 2,818
Economic Growth (Nominal GDP, ann. var. %) 6.6 0.3 -5.9 7.2 -1.7
Economic Growth (GDP, ann. var. %) 2.8 -1.7 -6.5 6.4 -3.5
Domestic Demand (ann. var. %) 4.4 -3.6 -6.6 3.8 -2.1
Private Consumption (ann. var. %) 5.3 -0.8 -10.6 5.6 -1.2
Government Consumption (ann. var. %) 4.2 5.1 7.9 5.9 8.2
Fixed Investment (ann. var. %) 1.7 -14.9 -11.1 8.3 -7.7
Exports (G&S, ann. var. %) 3.7 -6.2 -7.1 16.9 -12.6
Imports (G&S, ann. var. %) 4.5 -7.2 -7.0 15.8 -12.2
Retail Sales (ann. var. %) 7.6 -12.3 -25.5 6.5 -3.3
Wages (ann. var. %) 4.0 3.5 1.4 1.3 2.2
Unemployment (% of active population, eop) 2.7 3.1 6.3 3.8 3.3
Unemployment (% of active population, aop) 2.8 2.9 5.5 5.4 4.4
Fiscal Balance (% of GDP) 2.4 -0.4 -8.7 1.0 -4.3
Public Debt (% of GDP) 0.1 0.3 1.0 1.9 4.3
Money (ann. var. of M2 %) 4.3 2.8 5.8 4.3 1.6
Inflation (CPI, ann. var. %, eop) 2.5 2.9 -0.9 2.4 2.0
Inflation (CPI, ann. var. %, aop) 2.4 2.9 0.3 1.6 1.9
Inflation (PPI, ann. var. %, aop) 2.0 1.0 2.3 1.2 0.8
Base Rate (%, eop) 2.75 2.49 0.50 0.50 4.75
91-Day HIBOR (%, eop) 2.33 2.43 0.35 0.26 4.99
10-Year Bond Yield (%, eop) 2.05 1.80 0.75 1.50 3.63
Stock Market (ann. var. of Hang Seng Index, %) -13.6 9.1 -3.4 -14.1 -15.5
Exchange Rate (HKD per USD, eop) 7.83 7.79 7.75 7.80 7.80
Exchange Rate (HKD per USD, aop) 7.84 7.84 7.76 7.77 7.83
Current Account Balance (USD bn) 13.5 21.2 24.1 43.7 37.9
Current Account Balance (% of GDP) 3.7 5.9 7.0 11.8 10.5
Merchandise Trade Balance (USD bn) -71.7 -54.2 -43.8 -44.1 -49.8
Merchandise Exports (USD bn) 531 510 507 639 580
Merchandise Imports (USD bn) 603 564 551 683 630
Merchandise Exports (ann. var. %) 6.7 -4.1 -0.5 26.0 -9.3
Merchandise Imports (ann. var. %) 7.7 -6.5 -2.3 24.0 -7.9
Foreign Direct Investment (USD bn) 104.2 73.7 134.7 140.2 117.7
International Reserves (USD bn) 425 441 492 497 424
International Reserves (months of imports) 8.5 9.4 10.7 8.7 8.1
External Debt (USD bn) 1,694 1,665 1,789 1,877 1,813
External Debt (% of GDP) 468 459 518 509 504

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