May 3, 2023
HONG KONG – The International Monetary Fund is considering raising Hong Kong’s economic forecast despite its latest cut to the city’s growth outlook as the resumption of cross-border travel and the lifting of social distancing measures have rebooted consumption growth.
The IMF on Tuesday cut its full-year forecast for Hong Kong’s economic growth by 0.4 percentage points to 3.5 percent, but the deputy director for its Asia and Pacific department Thomas Helbling revealed the same day that the IMF may raise the city’s GDP growth in the upcoming Article IV consultation.
Lee said the city’s economic outlook would further improve as the economy on the Chinese mainland and the recovery of the city’s aviation sector picked up speed, though exports dropped in the first three months of the year
He noted that Hong Kong has recorded a strong rebound in consumption thanks to the resumption of normal cross-border travels with the Chinese mainland and the relaxation of social distancing measures and travel restrictions, adding that the pace of recovery is expected to continue.
Hong Kong’s post-pandemic economic performance bears testimony to the IMF’s upbeat remarks. Speaking before the weekly Executive Council meeting on Tuesday, Chief Executive John Lee Ka-chiu revealed that Hong Kong’s economy grew 2.7 percent year-on-year in the first quarter, reversing four consecutive quarters of contraction.
Lee said the city’s economic outlook would further improve as the economy on the Chinese mainland and the recovery of the city’s aviation sector picked up speed, though exports dropped in the first three months of the year.
Krishna Srinivasan, Director of the Asia and Pacific Department of the International Monetary Fund, discusses the IMF’s growth forecast this year for China and the Asia-Pacific during a media briefing in the Hong Kong Special Administrative Region on May 2, 2023. (CALVIN NG / CHINA DAILY)
“The GDP growth in the second quarter will be much better than the first quarter,” Lee said.
More than 760,000 tourists, including 320,000 from the mainland, visited the city in the first two days of the May Day “golden week”.
The number of mainland visitors is expected to hit 600,000 when the mainland’s five-day holiday ends on Wednesday, Lee added.
The jump in consumption came as the city opened its HK$20 million ($2.55 million) Happy Hong Kong campaign on Saturday with discounted film tickets at HK$30 drawing nearly 222,000 moviegoers and a gourmet food fair welcoming over 44,000 visitors over the weekend.
However, Helbling warned the Hong Kong economy is vulnerable to the external environment and that its trade performance would be hit by the risk of global recession, continued monetary tightening by major central banks, and banking woes in Europe and the United States.