Hong Kong Economic Forecast

Hong Kong Economic Outlook

October 16, 2018

Economic activity in the third quarter likely softened somewhat—following a deceleration in the second quarter—primarily due to an ongoing slowdown in the mainland combined with the effects of the US-China trade war, which is weighing on the external sector’s momentum as well as overall business sentiment. Retail sales growth picked up in August from July’s six-month low but remained below Q2’s solid average, while the PMI remained firmly anchored in contraction territory in Q3, with the average quarterly reading exactly matching that of Q2. Lastly, the island’s high-flying property market is showing signs of weakening amid elevated prices and rising interest rates, and many market analysts expect a sharp correction heading into next year.

Hong Kong Economic Growth

The economy is seen decelerating in 2019 and 2020 due to sizable headwinds looming ahead. Particularly, a sharp economic downturn in China, the rapidly escalating trade war between China and the United States, a strengthening of the HKD against regional peers and rapidly rising interest rates all will likely weigh on the country’s solid growth trajectory. Met the why particular panelists expect growth of 2.7% in 2019, which is unchanged from last month’s forecast, and 2.5% in 2020.

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Hong Kong Facts

Bond Yield2.483.38 %Oct 18
Exchange Rate7.84-0.11 %Oct 18
Stock Market25,455-1.92 %Oct 18

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