Paul Chan, the financial secretary of Hong Kong, has voiced his uncertainties regarding the city’s capability to meet the government’s economic growth projection of 5.5% for this year, given its weakened export sector.
On a Sunday radio show (25th June), Chan highlighted that the realisation of the projected growth is tied to factors such as export performance, capital investments, and consumption levels. He pointed out, however, that the city’s exports have been in decline for five successive months, thereby exerting economic pressure.
Chan cited struggling European economies, high-interest rates in the U.S., and the ongoing pandemic as challenges impeding Hong Kong’s growth.
With the reopening of borders, tourist numbers are back to half of pre-pandemic figures, while retail volumes have seen a near-complete recovery, standing at 90%. Despite this, Chan warned that consumption vouchers may have a restricted impact on growth if the international economic climate remains unfavourable.
Also read: Malaysia’s Exports Poised to Surge to US$425 Billion by 2030, Forecasts Standard Chartered
He added, “Even as we’ve rolled out consumption vouchers and support for SMEs to stimulate local employment and spending, their effects are still restrained. If the global environment improves, we might attain a 5.5% growth.”
Addressing Hong Kong’s dwindling competitiveness, Chan noted the government’s shift in its approach to managing the pandemic and proactive governance measures like attracting family businesses and skilled individuals. These efforts have yielded about 84,000 applications from various talent initiatives, with approximately 50,000 approved.
Previously in February, Chan predicted tough times for Hong Kong’s goods exports due to a slowdown in advanced economies. Nevertheless, he expects the mainland’s booming economy and eased cross-border restrictions to relieve some stress.
With lifted quarantine mandates for incoming travellers and regular cross-border travel resuming between Hong Kong and the Mainland, Chan anticipates a strong revival in visitor numbers. Additionally, he projects increased private consumption as overall economic sentiment recovers alongside economic activities and exchanges with the Mainland.
Chan concluded, “Bearing in mind these factors, I project a noticeable bounce back in the Hong Kong economy with a growth of 3.5 to 5.5% for the entire year.”
This news is based on a report by Marketing Interactive.
