Global economic growth has slowed down, Hong Kong’s rectifications continue to show up, and many financial institutions have lowered their economic growth forecasts
Xie Jiaxuan, an economic analyst at DBS Bank, said in an exclusive interview with the newspaper that social events are not the most direct drag on Hong Kong’s economic factors. Instead, the Sino-US trade war and the depreciation of the RMB against the US dollar directly impact economic pillars such as trade and financial services, and forecast Hong Kong in the second half of the year. The economy will go backwards and there will be no growth in GDP for the whole year.
Renminbi broke 7 passengers flocked no longer
Xie Jiaxuan said that Hong Kong, as a small open economy, is more sensitive to external events than local ones. Since the beginning of the trade war, Hong Kong’s two pillars of trade and finance have been severely hit, and the continued depreciation of the renminbi has fallen earlier. 7 Calculate the level, reduce the desire of visitors to Hong Kong, and affect the development of tourism and retail industry. He described that if the renminbi continues to be in a weak position, it will be difficult for passengers to flock to Hong Kong for consumption. Therefore, it is believed that social incidents are not the most direct cause of the local economy.
He pointed out that when the RMB exchange rate fell to nearly 7 levels in 2016, Hong Kong’s GDP growth slowed to about 1%, which was the worst performance in the past four years
Xie Jiaxuan analyzes the challenges facing Hong Kong from the two pillars of trade and financial services in Hong Kong. First of all, he pointed out that Hong Kong’s economy has the highest share of the trade and logistics industry. The first two major trading partners are China and the United States, which are in trade disputes. As the friction between the two sides heats up, the supply chain gradually moves to Southeast Asia. Vietnam has come outside in the past few months. Direct investment expands with multiples. He described that even if the factory does not relocate, the new investment will no longer enter the South China region, and Hong Kong’s re-export performance will be difficult to boost.
Beyond the trade and logistics industry, the financial services industry, the second largest economic pillar, is unlikely to survive the slowdown in global economic growth. Xie Jiaxuan pointed out that the trade war has risen sharply in the third quarter. Trump has said that the tariff rate of the $250 billion commodity will be raised to 30%, affecting the confidence of global investors, resulting in a significant reduction in cross-border product transactions for listing and financing in Hong Kong. Dragging down Hong Kong’s economic performance.
The United States is hard on China
Xie Jiaxuan believes that even if local factors are eliminated, external factors have not been resolved. For example, how the trade war is fermented and the results of the US election will continue to affect Hong Kong’s development. Although there are short-term positive news such as the extension of the implementation of tariffs during the process, the US policy toward China is tough. I believe that Hong Kong will still be difficult in the second half of the year, and Hong Kong’s independent fiscal policy is limited. The negative wealth effect continues and the Hong Kong economy is unlikely to rebound.
Xie Jiaxuan said that Hong Kong’s GDP is unlikely to grow this year, but it is unlikely that there will be continuous retrogression. Hong Kong experienced a financial turmoil in 1997, SARS in 2003 and the global financial tsunami in 2009, although the single-quarter GDP had fallen 8% year-on-year. However, the rebound has been strong and there has never been zero or negative growth for two consecutive years. The current situation is not as severe as the SARS and financial turmoil. I believe that there will be a slow economic growth of 0.5% next year.