In its monthly report on Hong Kong, OCBC said the economy was showing signs of recovery.
The Hong Kong government’s vaccine rollout, coupled with its targeted relief measures that may support border reopening, could help the economy recover after contracting 6.1% in 2020.
In its April report, OCBC Treasury Research projected gross domestic product (GDP) will expand 4.1% in 2021. OCBC’s forecast is slightly lower than HSBC’s 4.4% projection.
“As compared to the resilient financial sector and the reviving trade sector, the sectors hit hard by COVID-19 may take longer to recover amid a weak labour market and the unwinding of broad-based relief measures,” the report read in part.
OCBC said Hong Kong dollar rates may stay low, but will be capped by any large initial public offering, equity inflows or additional bill issue of the Hong Kong Monetary Authority.
“The active IPO market and the further financial integration of GBA combined reinforces that Hong Kong’s financial market remains resilient despite the potential political concerns,” OCBC said.
OCBC also noted the economy is showing signs of recovery as seen in the Private sector’s PMI, which rose to 50.2 in February, the highest in three years.
However, the bank maintained its estimate that the unemployment rate will still peak at 7-8% in the first half of the year, following an all-time high of 7.2% recorded in the three months to February.
The jobless rate will “retrace lower gradually in 2H,” the OCBC said.
This will likely be driven by the tourism-related and public transport sectors which may rebound as the vaccination program is expected to pick up in the second half of the year and allow the City to further reopen its borders. The government’s e-consumption vouchers are also seen to support domestic demand.
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