Date
16 July 2019
Hong Kong’s economy may face some bumps this year amid the US-China trade dispute, Financial Secretary Paul Chan warned on Sunday. Photo: Screenshot/Govt news video
Hong Kong’s economy may face some bumps this year amid the US-China trade dispute, Financial Secretary Paul Chan warned on Sunday. Photo: Screenshot/Govt news video

HK finance chief warns of weaker economic growth this year

Hong Kong’s economic growth might have fallen significantly in the last quarter of 2018, and there is the possibility that it could weaken further this year, Financial Secretary Paul Chan Mo-po warned on Sunday.

In a post on his official blog, Chan wrote that he estimates that Hong Kong’s economy may have expanded less than 1.5 percent in the three months to December compared to the same period a year ago.

If confirmed, that would mark the smallest gain since the first quarter of 2016, and will mean subdued economic growth for the third quarter in a row, the Hong Kong Economic Journal reports.

Chan suspects the city’s economic growth rate in 2018 might come in at 3 percent, the lower limit of the 3 to 4 percent range predicted in his budget in February last year.

Speaking to reporters after an event on Sunday, Chan noted that Hong Kong’s economic growth has been slackening last year, as it dropped from a 4.6 percent pace in the first quarter to 2.8 percent in the third.

In November, the government adjusted its estimate for economic growth for 2018 down to 3.2 percent, compared to 3.6 percent forecast by private sector analysts on average.

Chan said he does not rule out that the economy this year could slow further to below-trend growth, or less than 2.7 percent.

The figure was the average of annual growth in the past 10 years.

Explaining the rationale behind his prediction, the finance chief pointed out that Hong Kong’s export of goods in the fourth quarter posted near-zero growth due to the impact from Sino-US trade war, which also obviously affected consumer sentiment.

The government’s data showed the value of total export of goods in the fourth quarter of 2018, on a seasonally adjusted basis, decreased by 3.2 percent and the value of imports of goods decreased by 5.1 percent, compared with the preceding quarter.

The provisional estimate of the value of total retail sales was down 1.8 percent in the quarter compared with the preceding quarter, while the provisional estimate of the volume of total retail sales was down 1.1 percent.

In light of the downside risks, Chan stressed again in his blog on Sunday that the government will need to support companies, keep jobs, stabilize the economy and improve people’s livelihood.

Believing that the impact from trade frictions between the United States and China have not fully emerged yet, Kevin Lai Chi-man, chief economist for Asia ex-Japan at Daiwa Capital Markets Hong Kong, warned that if the two sides fail to reach some sort of an understanding by March 1, which is the deadline set for the negotiations, there may be more difficult days to come.

Leo Sin Yat-ming, a professor at the business school of the Chinese University of Hong Kong, urged the government to use its abundant financial reserves to cope with slowing economic growth by pushing for structural transformation as well as reducing the dependence on the financial and tourism sectors, and the property market.

Chan, who is scheduled to deliver at the end of this month his budget for the fiscal year that will begin in April, had said earlier in a blog post that financial surplus for the year is unlikely to be above HK$100 billion, unlike in previous years.

In his blog on Sunday, the finance chief noted that the surplus stood at HK$59 billion for the first nine months of the current fiscal year that ends in March.

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TL/JC/RC

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