HK finance chief uncertain if HK can achieve 5.5% growth relying on local consumption

Hong Kong's finance chief Paul Chan has stressed said that it is uncertain whether Hong Kong can reach the government’s predicted economic growth of up to 5.5% this year as the city's export performance remains weak.

Speaking on a radio programme on Sunday (25 June), Chan said that whether Hong Kong could achieve the expected economic growth would depend on the external environment including export, fixed investment and consumption. “However, Hong Kong's exports have dropped for five consecutive months which is imposing pressure on the city. The challenges Hong Kong facing include poor European economy, high U.S. interest rate and pandemic,” he said.

He added that after the opening of borders, the number of tourists to Hong Kong has returned to half of the pre-pandemic level, with retail volume nearly recovering to 90%.

Meanwhile, he said that despite handing out the consumption vouchers, it is believed to have limited effectiveness on economic growth if the external economic conditions remain poor. “Hong Kong's exports are still facing great challenges. Even though we have given out consumption vouchers and supported small to medium-sized enterprises, local employment and consumption, the impacts are still limited. If the external environment performs well, the economic growth may reach 5.5%,” he said.

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Regarding to the drop of Hong Kong's competitiveness, Chan said that the new government adjusted its response to the epidemic, and its governance thinking has also become more proactive, including the introduction of measures to lure family offices and talents. He added that around 84,000 applications have been received from various talent scheme while around 50,000 have been approved.

Back in February, Chan stated that given the further weakening of growth momentum in advanced economies, Hong Kong’s exports of goods will still face severe challenges this year. However, the accelerated growth of the mainland economy coupled with the lifting of restrictions on cross-boundary truck movements should alleviate part of the pressure. 

He revealed good news for exports of services, saying with the removal of quarantine requirements for inbound travellers and the normal cross-boundary travel between Hong Kong and the Mainland, the number of visitor arrivals is expected to see a strong rebound.

Domestically, as overall economic sentiment improves in tandem with the revival of economic activities and the rapid return of Hong Kong’s exchanges with the Mainland and the world to normalcy, private consumption will increase,  Chan emphasised. “Having regard to the above factors, I forecast that the Hong Kong economy will see a visible rebound this year with growth of 3.5 to 5.5% for the year as a whole," he added.

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