August 1, 2023
HONG KONG – Financial Secretary Paul Chan Mo-po expects Hong Kong’s GDP growth to have slowed in the second quarter, although the overall economy remains on a path to recovery.
The finance chief commented on Sunday on his blog that “year-on-year GDP growth is likely to be reported at a lower rate compared with the first quarter,” during which the economy expanded by 2.7 percent.
The official figure is scheduled to be released later this afternoon.
“The recovery track is often bumpy and marked by ups and downs. The most crucial thing is to maintain an upward trend and keep moving forward,” he said.
Hong Kong’s exports also weighed on its GDP expansion. In the second quarter, the value of the total exports of goods decreased 13 percent year-on-year, following an 18 percent year-on-year plunge in the previous three months
Local consumption and the tourism sector are the key engines of economic recovery this year amid the city’s border reopening to the rest of the world, Chan said.
Retail sales surged by 17 percent year-on-year from April to May, following a rebound of 24 percent in the first quarter. Chan expects total receipts of the catering sector to continue to show significant year-on-year growth over the same period, similar to the rebound seen in the first quarter, when the value rose by 81.7 percent.
However, external factors have resulted in changes to residents’ lifestyles and spending habits, heaping pressure on private consumption – one of the major drivers of the city’s growth, Chan noted.
“After three years of the pandemic, fewer people are hanging out at night and spending,” he said. “Neighboring city Shenzhen has developed many places that attract consumption. With the resumption of cross-border travel, Hong Kong people’s expenditure on the north side has increased significantly.”
Mainland tourists – who account for over half of Hong Kong arrivals – are inclined to engage in cultural and in-depth tours, rather than for the traditional purpose of shopping, he said.
To cope with changes, “We need more distinctive and creative marketing strategies and activities, better-quality products and services, and to explore new space for consumption growth… to attract more residents and tourists to stay and enjoy their happy consumption experience in Hong Kong,” he said.
Hong Kong’s exports also weighed on its GDP expansion. In the second quarter, the value of the total exports of goods decreased 13 percent year-on-year, following an 18 percent year-on-year plunge in the previous three months. Exports to the Chinese mainland, the United States, and the European Union, and to other major Asian markets recorded varying degrees of decline.
Due to the impact of interest rate hikes and weak external economic prospects, Chan projected fixed investment to soften slightly in the second quarter.