Hong Kong GDP may grow 2.8% in 2018

The domestic market continues to benefit from the global economic expansion.

Hong Kong’s economy is forecasted to expand conservatively by 2.8% next year as the market continues to benefit from the global economic expansion and sustained levels of consumer spending, according to Hong Kong Economic Monthly by Hang Seng Bank.

The factors that affect private consumption including household income and wealth are projected to remain supportive of private consumption levels.

On the central bank front, Hang Seng Bank chief economist Thomas Shik believes that the impact from a possible interest rate hike following the Fed’s policy tightening is likely to be modest as opposed to the view that an increase in prime lending rates will weigh down on consumption and investment.

The planned US tax reform may also drive higher economic growth for the United States which in turn could lead to higher demand for Asian exports and a rebound in domestic business investment, Shik added. 

“Counterbalancing these variables are the downside risks of potential capital outflows due to further US rate hikes and the possibility of a further slowdown in mainland China’s economy,” he said.