Risk of a double-dip recession remains remote

This is because the huge imported monetary stimulus will continue to boost mainland growth, according to HSBC.

“Coupled with improving labour market conditions, domestic demand should be well-armed to weather any deterioration in G3 demand around the corner, and see that GDP expands 5.4% this year,” said HSBC Global Research.

Said to be Hong Kong’s primary defence against collapsing global demand was its unique mix of imported monetary stimulus and mainland fiscal spill-over.

HSBC Global Research explained the mix: “Since Q3 2008, Hong Kong has reaped the benefit of the Fed’s ultra loose policies and record-low rates through a tightly managed currency board regime. At the same time, global investors have piled their capital into Hong Kong as a proxy for and/or conduit to China, tripling the territory’s total monetary base to over HKD1trn.”

The same “defence” is expected to be used by Hong Kong as external demand slows.