Hong Kong's GDP growth could hit 2.4% in 2017

The key risk to economic recovery is liquidity patterns.

Citi's new GDP forecast for this year is now 2.4%yoy (+0.6ppt), on the lower side of the Government’s new forecast range of 2-3%. The official underlying inflation is at 2% in 2017.

Here's more from Citi:

The key risk to economic recovery is liquidity patterns. HK continues to benefit from capital inflows despite multiple global shocks last year. Yet we could not be certain whether and to what extent the potential changes in US tax policies will change the behavior of funds repatriating back to the US and whether this could be offset by the inflows of funds from Mainland China.

More importantly if these two fund flow trends will occur this year, will the magnitude and duration of each occurrences be able to offset each other. Otherwise we will be running the risk of sudden liquidity tightness that will have negative implications on interest rates and asset prices.