Buckle up: Hong Kong’s economy headed for roller-coaster ride, analysts say
Economists predict unstable times ahead amid skyrocketing home prices and flagging retail sales as tourists lose appetites for luxury goods
A combination of record-high home prices, poor retail consumption and exports as well as unsettling political turmoil is likely to send Hong Kong’s economy on a roller coaster ride this year, economists predict.
Undercurrents of economic tumult are growing already as prices for both private and public homes broke new records despite government cooling measures and repeated warnings of interest rate hikes, some said. Private home prices soared 13.26 per cent last year in spite of hefty levies.
Meanwhile, tourists’ appetite for jewellery, watches and luxury items appears to be waning, as reflected in the 0.2 per cent drop in retail sales last year, the first decline since 2003, when the individual visit scheme was introduced to salvage Hong Kong’s economy in the wake of the Sars crisis.
Exports’ outlook appears shaky as the strength of US dollar – to which Hong Kong’s dollar pegs – erodes the city’s price edges, some economists said.
“It is worrying,” Bank of East Asia chief economist Paul Tang Sai-on said of the city’s economy. “People should brace for a stronger sense of crisis after a long period of low interest rates [and] high home prices.”
Financial Secretary John Tsang Chun-wah is due to offer a more full report on the city’s economy in his budget speech on February 25.