Hong Kong’s economy has fallen into a technical recession
The International Monetary Fund (IMF) released a report yesterday stating that Hong Kong’s internal and external difficulties are expected to shrink by 1.2% of GDP this year, which means that it will regress after 2009. Although GDP can rise by 1% next year, driven by private consumption, the pace of recovery is slower than before, and both short-term and medium-term risks have increased. The government is encouraged to respond to a large increase in expenditure in the short term. The IMF, as in previous years, has pointed out that the prudent macroeconomic policies that Hong Kong has pursued over the years have provided ample buffer space to meet cyclical and structural challenges and reiterated its support for the exchange rate system. The government welcomes the IMF’s recognition of Hong Kong’s sound policy framework and ample buffer space.
The IMF delegation completed a preliminary assessment of Hong Kong and pointed out that Hong Kong’s economy has entered a technical recession in the third quarter of this year
It is expected that the annual GDP will shrink by 1.2%. The recession mainly comes from the Sino-U.S. Trade war cracking down on exports and investment. The turmoil has also caused a significant drop in tourists visiting Hong Kong, and the affordability of home ownership is still tight, with significant uneven income.
The report estimates that although the economy will start to recover slowly next year, with the support of the recovery of private consumption, GDP can rebound by 1%, but the potential increase is less than 2.5%. Down to about 2.5 percent.
Trade war eases big bay development and boosts growth
The report believes that the risks of Hong Kong’s economic outlook are biased downwards, both internally and externally, including, for example, intensified trade wars, China and the United States raising technological and financial disputes, and opportunities for the Mainland economy to adjust. As for the local political situation, the situation has worsened, housing shortages, and income inequality Failure to resolve it in a timely manner has also had a significant impact on Hong Kong. However, when trade disputes ease and the development of the Greater Bay Area can further enhance the medium-term growth prospects.
The IMF recommends that the government should strengthen counter-cyclical financial support and increase spending substantially in the short term, including targeted funding, additional housing-related expenses, and retraining for unemployed workers. As for the medium term, structural measures should be introduced to ensure fiscal sustainability and fairer institutions, including open source and expenditure reduction, reducing dependence on property and land sales income, and increasing the labor force participation rate.
The report mentioned that Hong Kong’s policy of controlling the property market risk is still valid and should be maintained. It is believed that the relaxation of the property mortgage rate in the previous Policy Address will help reduce non-bank mortgages. It also recommends that the government carefully monitor changes in property prices and household liabilities. Level effects for timely adjustment.
The Financial Secretary, Chen Maobo, welcomes the IMF’s recognition of Hong Kong’s sound policy framework, the abundant buffer space it has established over the years, and its recognition of the long-term competitiveness of the Greater Bay Area. He pointed out that the latest economic situation will be closely monitored and further relief measures will be introduced if necessary. The Chief Executive of the HKMA, Yu Weiwen, also welcomes the IMF’s firm support for the exchange rate system and positive evaluation of the regulatory and supervisory framework. The authorities will continue to upgrade and update the supervisory system, especially for the banking industry to speed up technology applications.