Hong Kong's GDP growth to hit 2.5% in 2017

2017 headline CPI inflation is forecast to reach 1.9%.

In view of the upside surprise from the 4Q16 GDP print, analysts at Bank of America Merrill Lynch revise up 2017 and 2018 GDP growth forecast to 2.5% and 2.7% yoy, respectively (vs 1.7% and 2.0% yoy previously).

Taking into account of the one-off relief measures announced at the Budget Speech, BofAML also adjusted its 2017 headline CPI inflation forecast to 1.9% yoy (vs 2.6% yoy previously) and maintain its 2018 CPI inflation forecast at 2.9% yoy.

"We believe economic growth this year will continue to be underpinned by solid private consumption growth amid resilient labor market conditions and expected stable property prices. In addition, relative stabilization in external demand should help support regional trade flows and HK’s exports. However, HKD strength on potentially stronger USD and a faster-than-expected Fed rate cycle could pose downside risks to Hong Kong’s economic growth," says BofAML.