Hong Kong’s economy increased by 2.7% in the first quarter of 2023, according to John Lee, the Asian financial hub’s leader. He shared the news in a surprise revelation ahead of Tuesday’s formal publication of the statistics.
Although exports fell further in the first quarter, Lee predicted faster growth in mainland China’s economy. Combined with an increase in Hong Kong’s aviation capacity, it would provide additional support.
During a regular press conference, Lee shared some positive forecasts. He predicted that the economy would grow faster in the second quarter than it did in the first quarter.
Prior to the data’s planned publication at 0830 GMT, Lee noted the latest quarterly result contrasted to a 4.1% drop in the previous quarter.
Barclays economists predicted a 0.9% decline in Q1 GDP. Hang Seng Bank and Natixis estimated 1.1% and 2.5% growth, respectively.
According to official figures, the economy gained 5.3% on a seasonally adjusted quarterly basis from January to March. That way, it confirms Lee’s prior estimate.
According to the government, inbound tourism and domestic demand will continue to fuel economic development this year. Besides, tourist logistics should improve further as transportation and processing capabilities catch up.
A government representative stated that the increasing economic conditions and outlook would invigorate domestic consumption. Nevertheless, stringent financial circumstances will remain a hindrance.
Hong Kong’s economy should expand
The rebounding consumer spending on the mainland and a rise in travel should bring some profitable outcomes to Hong Kong.
Despite its own pandemic precautions and spillover from China’s rigorous “zero-COVID” policy, the future looks positive.
The former British colony eliminated all pandemic restrictions. Furthermore, Lee has prioritized enhancing international competitiveness and recruiting more foreign talent.
Thomas Shik, chief economist at Hang Seng Bank, expressed his opinion in the latest interview. He thinks the incoming statistics indicated a resurgence in the tourist and retail sectors. That will allow the Hong Kong economy to resume growth for the year.
High inflation and aggressive monetary tightening in advanced nations further harm Hong Kong. Besides, increased borrowing costs and a negative economic outlook weigh on asset values.
Its economy is aiming to rise 3.5% to 5.5% this year after contracting 3.5% in 2022. The prediction is according to Financial Secretary Paul Chan in a budget address for 2023/24 delivered in February.
Hang Seng Bank, Barclays, DBS, Natixis, and Standard Chartered have predicted that Hong Kong’s GDP growth will be between 3% and 6.5% in the year 2023. Gary Ng, senior economist at Natixis Corporate and Investment Bank, said Hong Kong’s economy should benefit from a cyclical resurgence. According to him, increased consumer spending and China’s re-opening will eventually enhance the process.