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Strong domestic growth should help lift Hong Kong out of recession this year, says CFO
Beijing’s grand plan to stimulate domestic growth should help lift Hong Kong out of recession before the end of the year, the chief financial officer predicted. While businesses relying on tourism must expect protracted hardships, the turnaround after two years of contraction could also be accelerated by advances in containing the coronavirus pandemic, including through a massive vaccination campaign, said the Sunday the Secretary of Finance, Paul Chan Mo-po. The economy has weakened under the triple attack of the launch of the trade war between the United States and China in 2018, the eruption of protests against the government in the summer of 2019 and the arrival of Covid-19 last January. Get the latest insights and analysis from our global impact newsletter on great stories originating from China. Gross national product has contracted for five consecutive quarters, decreasing 3.5% in real terms in the third quarter of 2020 compared to the previous year. In 2019, GDP contracted by 1.2%. The government estimates that the economy will contract 6.1 percent in 2020, the most on record. But Chan saw the light at the end of the tunnel. “The difficulties may still be there in 2021, but the tipping point is emerging,” he said on his blog. “I expect that we are still facing relatively big challenges in the first half of the year. But in the second half, there is hope that there will be stronger momentum for recovery.” The economy is expected to see growth throughout the year. year. “Chan said the economy would receive its strongest support from mainland China, outlining policies to stimulate domestic growth contained in the last five-year plan adopted by the leadership in November. If Hong Kong seizes the opportunities arising from the plan, its economy it would recover much faster, he argued. To that end, the city should leverage its edge in finance and international trade. About 70 percent of Hong Kong’s restaurants face closure amid the Covid-19 pandemic. The pace of recovery would depend on several other factors, including a successful fight against the pandemic, Chan said, adding that government support will continue until to control the health crisis. The tourism sector was expected to take time to recover given current travel restrictions, he said, describing the business environment as “severe.” But if Hong Kong residents accepted the vaccine campaign as expected by the government and other containment measures proved effective, economic recovery would accelerate in the second half of the year, the minister said. The city is battling the fourth wave of Covid-19 infections, which has raised the number of daily cases above 100 in eight days since November. On Sunday, the city confirmed another 41 infections, bringing the total to 8,964 and mass inoculation is expected to begin next month. The first million doses for 500,000 people will go to healthcare workers, caregivers in nursing homes and people with disabilities and residents aged 85 and over, in line with the prioritization of high-risk groups in vaccination programs implemented abroad . Chan said that while total retail sales fell 7 percent to 27.33 trillion yuan ($ 4.18 trillion) on the mainland in the first three quarters of the year, online shopping sales increased by about 10 percent, to about 8 trillion yuan. He said Hong Kong people were used to shopping on the internet and that businesses should make better use of online platforms to take advantage of opportunities. In its report “World Economic Outlook” published in October last year, the International Monetary Fund estimated that the GDP of the mainland would grow by 8.2% in 2021, while Hong Kong would expand by 3.7% . The projected global growth would be around 5.2%. Professor Terence Chong Tai-leung, an economist at Chinese University, was optimistic about the city’s economy. He said export figures for November last year had already exceeded pre-Covid-19 levels. Hong Kong gears up for the first annual drop in house prices in 12 years It was an indicator of where the city’s economy was heading, because trade and logistics accounted for about 20 percent of Hong Kong’s GDP, added. Official figures showed that the value of exports increased. 5.6 percent in November from a year earlier to HK $ 379.6 billion. “While restaurants have been affected by the pandemic, they do not represent a large part of Hong Kong’s GDP,” he said. The city’s GDP fell 9.1 percent in the first quarter of last year. Chong said that if Hong Kong’s economy in the first quarter of 2021 were to go back to what it was before the outbreak, growth would already be 9.1%. Justice Minister Teresa Cheng Yeuk-wah also noted that the five-year plan is critical to the city’s prospects. . Writing on his blog, Cheng said that the development goals for the Greater Bay Area offer tremendous opportunities for Hong Kong’s legal sector, noting the central government’s support for the city to become an arbitration center. The Greater Bay Area is Beijing’s plan to connect Hong Kong. Macau and nine cities in Guangdong provinces an economic and innovative powerhouse More from South China Morning Post: * Hong Kong’s welfare chief disagrees with official data showing 1.5 million people are below poverty line, argues that the figure does not reflect government aid * RCEP agreement, China dual circulation strategy to strengthen Hong Kong’s status as an international commercial and financial center, says Victor Fung This article Strong national growth should help to get Hong Kong out of recession this year, says Chief Financial Officer first appeared on South China Morning Post for the latest news from South China Morning Post download our mobile app. Copyright 2021.
