ECONOMY | Staff Reporter, Hong Kong

Hong Kong’s recovery unlikely to be swift: Hang Seng Bank

Economic growth is expected to ease to an average of 4%.

Hang Seng Bank noted:

The slowdown of the Hong Kong economy appears to be continuing, but the downturn has been milder than many had expected. Consumption momentum remains largely intact, thanks to tight labor market conditions and strong inbound tourism. Recent trade data also seem to be supportive for Q4 growth.

Going forward, global risks are rising, including the European debt predicament, deficit reduction in the US, and potential financial market volatility, which could dampen the growth outlook of the territory.

Hong Kong’s purchasing managers’ index (PMI) has stayed in contraction territory for four straight months, suggesting that gusty external headwinds might also squeeze local investment spending. Overall growth numbers will likely turn worse in 1Q12 before turning better. However, given that the global economic problems are structural and therefore could not be resolved easily, Hong Kong’s expected recovery in 2H12 is unlikely to be swift. For 2012 as a whole, we expect Hong Kong’s economic growth and inflation to ease to an average of 4% and 4.5% respectively.

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