,Hong Kong

Hong Kong’s economic growth slows down as border control remains

The city’s GDP expanded by 7.5% in the second quarter from 7.9% previously.

Hong Kong’s gross domestic product (GDP) grew by 7.5% in the second quarter of the year, according to the advanced estimates of the Census and Statistics Department.

This dipped from 7.9% in the first quarter (Q1) of the year that ended six consecutive quarters of contraction.

The OCBC Treasury Research linked the slow down to persisting border control amongst other containment measures.

The two main drivers of GDP growth in Q1 including fiscal stimulus and strong external demand remained intact in the second quarter (Q2),” the OCBC said in a report.

“Despite the rebound, private consumption expenditure and fixed investments were still down by 8.3% and 3.5%, respectively from Q2 2019.”

It added that due to continued restrictions on tourism, exports of services fell by 43.3% from Q2 2019.

“This indicates that the economic recovery remained slow probably due to the ongoing containment measures in particular border controls,” the OCBC said, noting the support from fiscal stimulus and external demand may have already peaked.

Despite this, it expects local consumption to further pick up, which will likely be driven by a “faster-than-expected” drop in joblessness, couple with the rising vaccination rate and the rollout of e-consumption vouchers.

However, stronger economic recovery may still require the relaxation of border controls.

On this note, the OCBC maintained its GDP growth forecast at 5-6% for the full year 2021, assuming that partial border reopening will be seen in the second quarter.

Likewise, the UOB Bank expects that the economic outlook of the city will be “limited” by travel restrictions.

“Whilst sustained recovery in external demand, improving domestic job market and pent-up domestic demand are positive for Hong Kong’s outlook, the rebound will still be limited by strict COVID-19 safety measures and international travel restrictions as its economy is largely service-oriented,” UOB Bank said in a separate report.

It maintained its full-year forecast of 6.7%. It expects the official forecast of 3.5%-5.5% to be revised higher.

Join Hong Kong Business community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Leasing momentum in the retail market continues to improve in August 2021.
The new prices will give customers greater flexibility when booking flights.
Total employment in the private sector decreased by 0.4%.
Tollerort port terminal is located in the Port of Hamburg, Germany.
The inflation rate is at 1.2%.
It highlights the importance of SAF as it works towards net-zero by 2050.
This is 95.3% lower than pre-pandemic levels in August 2019.
This is an 8% increase from the first quarter of 2021.
Payment card usage increased by 18.8% QoQ in Q2 2021.
Compared with the end of Q2 2020, SVF accounts in use were up by 0.6% in 2021.
41% of Hong Kong consumers support local businesses.
Bond Connect will expand mutual access between Hong Kong and China markets.