Hong Kong economy to recover this year despite external headwinds – experts

The city’s economy expanded 1.5% YoY in 2Q23.

Hong Kong recorded an uneven recovery in 2Q23, posting a year-on-year growth but a month-on-month decline.

Despite the uneven recovery and several external headwinds, Hang Seng Bank experts believe that Hong Kong’s economy will recover this year, forecasting a 4.0% growth for 2023.

“The Hong Kong economy showed growth in the first half of this year, with consumption and inbound tourism expected to continue supporting growth in the remainder of the year,” Thomas Shik, chief economist at Hang Seng Bank said.

Shik, however, underscored that the city must not overlook external headwinds such as the high-interest rate environment that could persist for some time and the global economic slowdown which will continue to pose a challenge to the external trade sector.

“The increases in US interest rates have resulted in higher local interest rates, as seen in the upward trend of interbank rates this year. Unless the Federal Reserve signals that interest rate cuts are on the horizon, local interest rates might remain elevated. This could create pressure on business investment and asset markets,” Shik said.

“External trade has been continuously declining since early 2022 and could remain weak in the near future. Due to a lower base of comparison, the decline in exports and imports may ease towards the end of the year,” Shik added.