Hong Kong lowers full-year growth forecast to 3.2%, government economist warns geopolitical tensions, high interest rates to affect outlook

The government has lowered its full-year forecast for Hong Kong’s economic growth to 3.2 per cent, warning that a worsening external environment, rising geopolitical tensions and high interest rates will continue to pose challenges.

Government economist Adolph Leung Wing-sing on Friday said the figure was revised down from the earlier forecast of 4 to 5 per cent after taking into account the output in the first three quarters of the year and the near-term outlook, adding authorities would closely monitor the situation.

He explained a worsening external environment would continue to affect the city’s economic outlook, but more visitors, increased household income and government initiatives such as the “Night Vibes Hong Kong” campaign could boost growth.

“Looking ahead, inbound tourism and private consumption will continue to underpin economic growth for the rest of the year,” Leung said. “Yet, the difficult external environment amid increasing geopolitical tensions and tight financial conditions will continue to weigh on exports of goods, investment and consumption sentiment.”

Leung said economic growth in the fourth quarter would fall short of government expectations as high interest rates would continue to hit exports and local consumption.

Gross domestic product rose by 0.1 per cent to reach 4.1 per cent in the third quarter compared with the previous three-month period, according to data from the Census and Statistics Department.

In the second quarter, GDP grew at a revised 1.5 per cent from a year ago, down from a 2.9 per cent increase in the first quarter. In 2022, it contracted by 3.5 per cent from a year earlier.