The government has revised down its full-year forecast for Hong Kong’s economic growth to 3.2 per cent, warning that a worsening external environment, rising geopolitical tensions and high interest rates will continue to pose challenges.
“Taking into account the actual outturn in the first three quarters of 2023 and the near-term outlook, the real gross domestic product (GDP) growth forecast for 2023 as a whole has been revised down to 3.2 per cent, from 4 per cent to 5 per cent in the August round of review,” government economist Adolph Leung Wing-sing on Friday said.
“The government will continue to closely monitor the situation.”
The GDP rose by 0.1 per cent to 4.1 per cent in the third quarter compared with the previous three months, according to data released by the Census and Statistics Department.
Leung said a worsening external environment would continue to affect the city’s economic outlook, but more visitors, better household income and government initiatives such as the “Night Vibes Hong Kong” campaign would improve the situation.
“Looking ahead, inbound tourism and private consumption will continue to underpin economic growth for the rest of the year,” he said.
“Yet, the difficult external environment amid increasing geopolitical tensions and tight financial conditions will continue to weigh on exports of goods and investment and consumption sentiment.”
In the second quarter, GDP grew at a revised 1.5 per cent from a year ago, down from a 2.9 per cent increase in the first quarter. In 2022, it contracted 3.5 per cent from a year earlier.
Financial Secretary Paul Chan Mo-po earlier warned Hong Kong’s GDP this year would be lower than previously expected, saying economic growth would range between 3 and 4 per cent year-on-year, as the city’s performance in the first three quarters fell slightly below official estimates.
In August, authorities revised their full-year GDP forecast for 2023 from between 3.5 and 5.5 per cent to between 4 and 5 per cent, predicting a weakened global trade environment would further weigh on exports.
Chan said Hong Kong would record a higher-than-expected deficit in the current financial year as shrinking revenue from stamp duties and land sales had taken a toll on government coffers.
During the third quarter, private consumption tapered off to 6.3 per cent growth year on year compared with a 7.7 per cent rise in the previous three months.
The government’s consumption expenditure declined 4.5 per cent year on year in the third quarter, lower than the 9.8 per cent in the previous three months.
Hong Kong’s economy is closely linked to mainland China’s. The mainland’s economy grew by 1.3 per cent in the third quarter compared with the previous three months, and 4.9 per cent year-on-year amid a weakened property market.