Economy to contract by 0.7% in 2022: forecast

The GDP outlook got downgraded amidst a deteriorating external environment.

Experts no longer expect Hong Kong's economy to expand by 1.3% in 2022 after GDP contracted by 2.6% YoY in 1H22.

UOB now forecast that the city's full-year GDP will contract by 0.7% YoY.

Apart from the decline in the 1H22 GDP, UOB said it also considered the deteriorating external environment when it downgraded its forecast for Hong Kong.

"Hong Kong’s economy is not out of the woods yet. Despite a shortened mandatory quarantine, the recovery in tourism is expected to remain weak in 2H22," said UOB.

"Private consumption may receive a temporary boost from Phase II of the consumption vouchers disbursement in August, but overall demand will be dampened by rising interest rates and uncertainties in the Mainland," the expert added.

In the short term, however, UOB said GDP will return to growth.

In Q3 and Q4, it expects GDP to expand by 0.7% YoY and 1.8% YoY, respectively.