Financial Secretary John Tsang Chun-wah said Hong Kong’s economic growth is likely to slow down in the second half from the previous six months amid external uncertainties, the Hong Kong Economic Journal reported on Monday.
Expectations of the return of the interest rate hike cycle in the United States may fuel capital outflow and currency devaluation in some Asian countries and emerging markets with weaker economic fundamentals, and this could lead to drastic adjustments in asset value and instability in global finance, Tsang wrote in his blog over the weekend.
Vulnerable economies with deficits in their current accounts and fiscal budgets are showing signs of structural problems and imbalances between their internal and external dynamics, he said.
With increasing debt levels, these economies will face difficulties in financing costs as investment sentiment suffers amid a strengthening US dollar.
Nonetheless, Tsang is confident in the city’s economic fundamentals, saying it is good enough to meet headwinds.
He revised his estimate for Hong Kong’s GDP growth this year to 2-3 percent from the previous 1-3 percent.
The city continues to register surpluses in its current account and fiscal budget, Tsang said, adding that Standard & Poor’s has maintained its “AAA” long-term credit rating with a “stable” outlook.
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