Hong Kong’s economic system grew 2.7 % within the first quarter of 2023, John Lee, the chief of the Asian monetary hub, mentioned in a shock announcement forward of Tuesday’s official launch of the information, to snap 4 consecutive quarters of contraction.
Although exports continued to say no within the first quarter, sooner progress within the economic system of mainland China, coupled with acceleration of Hong Kong’s aviation capability, would supply additional help, Lee mentioned.
“Economy growth in the second quarter will be better than the first quarter,” he instructed an everyday information briefing. “The economy this year will be better than last year.”
The newest quarterly determine in comparison with a 4.1-percent contraction within the earlier quarter, Lee, who’s Hong Kong’s chief government, mentioned, previous to the scheduled 0830 GMT launch of the information.
Economists from Barclays had anticipated a contraction of 0.9 % in Q1 GDP, whereas Natixis and Hang Seng Bank forecast progress of 1.1 % and a couple of.5 %, respectively.
On a seasonally-adjusted quarterly foundation, the economic system grew 5.3 % within the interval from January to March, in keeping with official knowledge that confirmed Lee’s earlier determine.
The authorities mentioned inbound tourism and home demand would stay the main drivers of financial progress this yr, and customer arrivals ought to get well additional as transport and dealing with capability proceed to catch up.
“The improving economic situation and prospects should boost domestic demand, though tight financial conditions will remain a constraint,” a authorities spokesman mentioned.
Battered by its personal pandemic measures in addition to spillover from China’s stringent “zero-COVID” coverage, Hong Kong’s economic system is predicted to learn this yr from recovering client spending on the mainland and a rebound in journey.
All pandemic curbs have been lifted within the former British colony, the place Lee has set precedence on enhancing worldwide competitiveness and attracting extra abroad expertise.
“Incoming data pointed to a recovery in the tourism and retail sectors, supporting the Hong Kong economy to return to the path of expansion for the year,” mentioned Thomas Shik, chief economist at Hang Seng Bank.
“That said, the relatively weak trade performance suggested that a global slowdown continued to pose challenges to the growth outlook.”
Hong Kong additionally faces dangers from excessive inflation and aggressive financial tightening in superior economies with larger borrowing prices and a pessimistic financial outlook hitting asset costs.
Its economic system is predicted to develop 3.5 % to five.5 % this yr after shrinking 3.5 % in 2022, Financial Secretary Paul Chan mentioned in a 2023/24 finances speech in February.
Barclays, Hang Seng Bank, DBS, Natixis and Standard Chartered forecast Hong Kong’s GDP to develop between 3 % and 6.5 % in 2023.
“Hong Kong’s economy is set to embrace a cyclical rebound of better household spending and China’s re-opening,” mentioned Gary Ng, senior economist at Natixis Corporate and Investment Bank.
“However, the pressure from external trade and investment may continue to linger in the short run due to the downturn in the tech cycle and high-interest rates.”
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