25 June 2019
HK’s Economy Slows Down but Fundamentals Remain Sound
Double hit by worsening external environment prompted by the escalating Sino-US trade frictions and weaker domestic demand amid asset price adjustment, Hong Kong's economy further decelerated this year. Although there are some favorable factors in the second half of the year, such as the Federal Reserve's dovish stance, positive wealth effect and the low base for comparison, uncertainties caused by trade frictions will continue to have a lasting impact. Therefore, Hong Kong's economy may continue to slow down this year.
In the first half, Hong Kong’s economy experienced slow growth
Hong Kong's economy showed the following characteristics in the first half of this year.
Firstly, the overall economy experienced a marked slowdown. The Gross Domestic Product (GDP) decelerated sharply in growth, from 1.2% in real terms in the fourth quarter last year to a mere 0.6% in the first quarter this year, which is the worst performance in 10 years, and on the brink of recession. In the past thirty years, such low economic growth occurred only during the Asian financial crisis in 1997, the burst of the dot-com bubble in 2001, and the outbreak of the global financial tsunami in 2009. In the second quarter, the economy of Hong Kong remained in the doldrums, with merchandise exports and retail sales plummeting by 2.6% and 4.5% respectively in April, more than the decline of 2.4% and 1.2% in the first quarter. It is unlikely that the trend will reverse quickly in May and June. It seemed like a foregone conclusion that Hong Kong's economy would record slow growth in the first half of the year.
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