Hong Kong Economic Forecast

Hong Kong Economic Outlook

July 17, 2018

The economy likely shifted into a lower gear in the second quarter. A further decline of the PMI in June closed out a string of dismal prints in Q2, underscoring how weaker Chinese demand has dragged on the private sector. Furthermore, indications of a slowdown in China could further dampen demand for Hong Kong exports and investment spending. Domestic demand appeared resilient in Q2, however, supported by expansionary fiscal stimulus and a robust labor market. Moreover, May’s solid retail sales report reaffirms a pick-up in consumer spending. Although housing prices remain elevated near all-time highs, creating a wealth effect for homeowners, government measures including a new property tax, paired with rising domestic interest rates, could finally cool the buoyant housing market.

Hong Kong Economic Growth

While the economy remains in good health, buoyed by strong domestic fundamentals, several headwinds persist. Hong Kong’s dependence on trade makes it vulnerable to escalating U.S.-China trade disputes and potential knock-on effects to the external sector. Moreover, monetary policy normalization in the U.S. will continue to tighten domestic financial conditions and provoke capital outflows. Met the why particular panelists expect growth of 3.7% in 2018, up 0.2 percentage points from last month’s forecast, and 2.7% in 2019.

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Hong Kong Facts

ValueChangeDate
Bond Yield2.193.38 %Aug 15
Exchange Rate7.85-0.11 %Aug 15
Stock Market27,324-1.92 %Aug 15

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