Hong Kong Economic Forecast

Hong Kong Economic Outlook

November 13, 2018

Economic momentum appears to have slowed in the third quarter and is most likely to continue weakening in Q4 and beyond. The shift mainly reflects an ongoing slowdown in mainland China coupled with the effects of the escalating U.S.-China trade war, both of which weigh on the external sector and negatively impact business and consumer confidence. Throughout Q3, the PMI remained mired in negative territory, matching the feeble performance logged in the second quarter. Meanwhile, retail sales momentum slowed markedly, with sales volumes even declining compared to Q2. Lastly, boding poorly for private spending, the housing market cooled in August and September—with many analysts anticipating a sharp correction going forward—while the stock market continued to post losses in Q3 and October.

Hong Kong Economic Growth

Growth is poised to decelerate in 2019 and 2020 as multiple headwinds loom. Most notably, the slowdown in China and its trade war with the U.S. will dampen investment and external demand. Furthermore, rapidly rising interest rates will weigh on private consumption, while the strengthening of the HKD against local trade partners’ currencies will likely erode the competitiveness of the external sector and could further punish the stock and housing markets. Met the why particular panelists expect growth of 2.6% in 2019, which is down 0.1 percentage points from last month’s forecast, and 2.5% in 2020.

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Hong Kong Facts

Bond Yield2.353.38 %Nov 15
Exchange Rate7.83-0.11 %Nov 15
Stock Market26,113-1.92 %Nov 15

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