After a weak start, Hong Kong’s economy gradually improved over the course of 2016 and eventually closed the year with a 1.7 percent gross domestic product growth.
On the back of the recovering trend, Financial Secretary Chan Paul Chan Mo-po predicts in his 2017-2018 budget speech a growth clip of 2-3 percent for 2017.
Improving global economy will lend support to Hong Kong’s exports, Chan said.
With the mainland economy moving towards a pattern of sustainable development, it should be able to maintain a medium-high pace of growth, offering an important support to global economic growth.
Emerging economies in Asia are also likely to do well, following a rebound in commodity prices, he said.
Internally, a strong job market, low unemployment rate and improving corporate earnings will support consumer confidence and domestic spending. Infrastructure investment will also boost domestic demand.
Nevertheless, Chan points to a number of risk factors for the local economy.
“The US economy has continued to improve in the recent period but the economic policy agenda of the new administration has remained unclear,” he said.
“Despite the fact that the US may introduce fiscal stimulus measures conducive to global economic growth, there is increasing market concern over whether the US will roll out, in phases, a number of trade protection measures, which may disrupt the improving growth momentum in global trade.”
Meanwhile, the financial chief believes the Federal Reserve will pursue or even expedite the normalization of US interest rates.
“Economic growth in Europe is still constrained by its structural debts. This, together with the Brexit developments and the upcoming general elections in some major European countries this year, will complicate and add uncertainties to the political and economic outlook for Europe,” Chan said.
“This may weigh on the European economy as well as global monetary and financial stability.”
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