Hong Kong’s economic system suffered a 3.5 per cent contraction final 12 months as town struggled to protect its standing as Asia’s monetary hub, however economists forecast a rebound to progress in 2023.
The Chinese language territory’s economic system shrank 4.2 per cent 12 months on 12 months within the fourth quarter of 2022, in line with official authorities knowledge launched on Wednesday, marking a fourth consecutive quarter of contraction.
The total-year determine for 2022 was worse than authorities forecasts of a 3.2 per cent decline, whereas a contraction within the third quarter was revised right down to 4.6 per cent, from 4.5 per cent.
Economists forecast Hong Kong’s economic system to get well to 4 per cent progress in 2023, which might exceed regional rival Singapore, however warned it might take months for the battered economic system to achieve pre-pandemic output.
The town, which was successfully reduce off from mainland China and the remainder of the world beneath journey restrictions that lasted practically three years, solely dropped most of its Covid-19 curbs and resumed quarantine-free journey late final 12 months.
A authorities spokesperson blamed disappointing figures on a plunge in exports and weakened home demand beneath the pandemic curbs. Whole exports fell 8.6 per cent final 12 months from 2021, to HK$4.4tn (US$550bn).
“An anticipated sturdy rebound of inbound tourism following the elimination of quarantine preparations for guests and resumption of regular journey between Hong Kong and the mainland ought to underpin a restoration,” the spokesperson mentioned whereas noting that “softer progress of superior economies will proceed to pose challenges”.
Hong Kong has additionally confronted monetary stress from falling property costs, which declined about 15 per cent final 12 months. As dwelling costs slid and rates of interest rose, the variety of detrimental fairness mortgages within the metropolis hit an 18-year excessive, leaping to 12,164 circumstances by the top of December from 533 in September.
Moody’s Analytics forecast Hong Kong’s 2023 gross home product progress at 4 per cent, which might surpass Singapore’s 2.1 per cent. The town-state, which reopened to the world months earlier, recorded progress of three.8 per cent for 2022.
However Heron Lim, a Moody’s Analytics economist, mentioned the “financial harm for Hong Kong will take time to heal”.
“We at present mission that Hong Kong will solely exceed pre-pandemic output peaks in 2024,” he mentioned.
Natixis senior economist Gary Ng mentioned Hong Kong might acquire as much as $22bn in annual tourism income, equal to five.9 per cent of its economic system, if journey was normalised with mainland China.
Hong Kong recorded simply 443,000 guests within the first 11 months of 2022, lower than 1 per cent of the identical interval in 2019. The restoration has additionally been gradual: simply 163,000 travellers visited town in the course of the lunar new 12 months vacation final week — historically a peak for mainland vacationers — trailing far behind neighbouring playing hub Macau with 451,000.
However some native enterprise representatives expressed optimism in regards to the territory’s outlook.
“The return of mainland Chinese language vacationers has introduced a glimpse of hope to the tourism and retail sectors, which play an important function in Hong Kong’s restoration,” mentioned Jonathan Choi, chair of Hong Kong’s Chinese language Common Chamber of Commerce.
China’s economic system expanded 3 per cent final 12 months, its second-weakest progress price since 1976, however the IMF this week raised the nation’s 2023 progress forecast to five.2 per cent because the economic system reopens.