UBS slashes Hong Kong GDP forecast as trade war, protests weigh on city’s economy
- Swiss bank cuts forecast to 0.8 per cent from 2.4 per cent for 2019
- Downgrade came after GDP growth fell below expectations in second quarter
UBS dramatically cut its economic growth forecast for Hong Kong, citing uncertainty surrounding the US-China trade war and protests that have disrupted business in the city since June.
The Swiss bank slashed its forecast for gross domestic product (GDP) growth to 0.8 per cent from 2.4 per cent for this year.
The forecast cut came days after Hong Kong’s GDP growth in the second quarter came in at 0.6 per cent, unchanged from the first quarter and well below the consensus forecast of 1.5 per cent.
“Both external and domestic uncertainties are likely to continue to drag private sector investment,” UBS economists William Deng and Tao Wang said in a research note released on Friday. “There is little clarity from the US-China trade negotiation so far into the third quarter, external economic growth did not show much sign of improvement, and domestic public protests are adding further complications.”
Early on Friday morning, US President Donald Trump said he would add a 10 per cent tariff on US$300 billion of goods made in China in September, meaning nearly all imports from China are subject to levies as the trade war between the world’s two biggest economies escalates further.