Hong Kong's Economic Growth in Third Quarter 2023

In an encouraging yet cautious update, the Hong Kong government announced this week that the economy expanded by 1.8% year-on-year in the third quarter of 2023. This growth is a beacon of hope, but the forecast for 2024 has been adjusted significantly, reflecting a more tempered outlook.

Revised GDP Growth Forecast for 2024

The new estimate predicts a GDP growth rate of 2.5%, revised down from an earlier range of 2.5% to 3.5%. The economy recorded notable performance earlier in the year, with growth rates of 2.8% in the first quarter and 3.2% in the second quarter. However, the ongoing turbulence in the global economic landscape has posed challenges that have affected Hong Kong's recent performance.

Government's Response and Economic Outlook

Government economist Adolph Leung reassured the public, stating, "While the external environment has turned more challenging recently, the Hong Kong economy is expected to maintain its growth momentum for the remainder of the year." Despite this optimism, seasonal adjustments show that the economy contracted by 1.1% in the third quarter, following modest growth of 0.3% in the second quarter.

Inflation and Consumer Price Expectations for 2024

The government has acted swiftly to reassess its full-year real GDP growth forecast and inflation expectations based on current trends and global developments. For 2024, the underlying consumer price inflation rate is now projected at 1.1%, with the headline inflation rate expected to be 1.7%, down from previous estimates of 1.3% to 1.9%.

Tourism Recovery but Subdued Retail Activity

In a brighter aspect, Hong Kong is experiencing a robust recovery in tourism, with an anticipated influx of around 46 million visitors this year. However, this has not translated to increased consumer spending and retail activity, which remain subdued. The economy is also facing hurdles such as declining stock listings and persistent capital outflows, indicating a complex economic environment.

Calls for Economic Reform

In his recent policy address, Chief Executive John Lee highlighted the pressing need for economic reform and revitalization of Hong Kong's financial markets. He vowed to seek new growth opportunities to stimulate development and enhance economic recovery, striving to position Hong Kong as a resilient global economic hub once again.

Conclusion: Hope for Economic Recovery

With government strategies in play and the tourism sector showing promise, the future may hold new opportunities for recovery—amidst the challenges, hope remains alive for a flourishing Hong Kong economy.