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HSBC, Citibank predict Hong Kong’s economy will contract by up to 5 per cent this year before recovering in 2021
- HSBC Private Banking expects GDP will contract 5 per cent this year, while Citibank has forecast a 4.6 per cent slump
- 11 of the largest Chinese firms listed in the US could relist in Hong Kong in the next three years, says HSBC
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Hong Kong’s economy is set to contract sharply this year before rebounding in 2021, with business activity expected to gradually pick up following a slump triggered by the coronavirus pandemic, according to forecasts by two leading banks on Monday.
The city’s gross domestic product (GDP) could contract by 5 per cent in 2020, and grow by 4.3 per cent next year, according to HSBC Private Banking. Citibank’s forecast was a bit more tempered, predicting a 4.6 per cent decrease this year, followed by 2.7 per cent growth in 2021.
“The outbreak of coronavirus has led to a sharp decline in foreign trade, consumption and business activity in Hong Kong,” said Fan Cheuk-wan, chief market strategist for Asia at HSBC Private Banking, at their investment outlook for the second half of 2020. “Even though we are still at a stage of gradual reopening, we expect economic activity to slowly resume in the second half of the year.”
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Fan also expects countries around the world to gradually relax travel restrictions, which would help to support retail and consumption activity in Hong Kong as tourists return to the city.
“The impact of the Hong Kong government’s largest ever economic stimulus policies are also expected to be felt in the coming 12 months,” said Fan.
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Both banks also predicted that the global economy would contract for the year, followed by a larger rebound next year.
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