Hong Kong to lower annual economic growth forecast on Friday, says John Tsang

Considerable year-on-year fall in retail sales and sluggish private consumption led to disappointing second quarter

PUBLISHED : Monday, 11 August, 2014, 2:22pm
UPDATED : Monday, 11 August, 2014, 11:28pm

Financial Secretary John Tsang Chun-wah says the government will this week lower its forecast for Hong Kong’s economic growth this year, after a disappointing second quarter that saw growth slow and unemployment rise slightly.

Retail sales fell considerably year-on-year, thanks in part to a drop in tourist spending particularly on luxury items such as jewellery and watches.

Private consumption increased only slightly, and capital investment hit a five-year low, while the jobless rate rose to 3.2 per cent from 3.1 per cent of the working age population in the second quarter.

Tsang said officials would hold a press conference on Friday to announce detailed figures and a revised estimate for this year’s growth, which was originally predicted to range between 3 per cent and 4 per cent.

He said he was very worried about the city’s economic slowdown.

“Since the city’s economic performance in the first half was worse than expected, we will cut the full-year GDP growth forecast on Friday,” Tsang wrote on his blog on Sunday.

He also joined the chorus of establishment figures warning of the potential dire consequences of Occupy Central, claiming that “confrontational” campaigns for universal suffrage could cause a “perfect financial and economic storm” when combined with sluggish growth.

Tsang said that international “crocodiles” – Cantonese slang for hedge funds – could seize on political instability and that “the consequences would be unimaginable”, but offered no further details.

Tsang did not refer to Occupy by name. The pro-democracy movement plans to stage an open-ended protest camp in Central if the government’s official plan for the 2017 chief executive election does not guarantee voters a genuine choice between candidates.

The official plan is expected in October.

Tsang wrote on Sunday that Hong Kong is at a crossroads in its constitutional development, the outcome of which would have a significant impact on the economy and financial markets.

The Census and Statistics Department announced in June that the value of retail sales in April dropped 9.8 per cent year on year to HK$38.8 billion, and 9.5 per cent in volume.

Hong Kong’s economy grew 2.9 per cent last year.