Hong Kong Economic Outlook
February 25, 2020In the final quarter of the year, economic activity declined at the sharpest rate in over a decade. Plunging fixed investment and a frail external sector led the contraction, while private consumption dropped at a slightly softer pace in Q4 but remained depressed nonetheless. Turning to the first quarter, the economy is expected to remain battered amid the coronavirus outbreak which has paralyzed Chinese economic activity. The manufacturing PMI was stuck in negative territory in January despite reaching a six-month high; employment levels continued to tick down; and inflation is expected to intensify due to the coronavirus outbreak. Meanwhile, in politics, pro-democracy protests have seemingly taken a back seat as of late due to fears of the coronavirus spreading in Hong Kong, exacerbating uncertainty over a resolution to the current political turmoil.
Hong Kong Economic GrowthThe economy should recover in H2 this year on a favorable base effect, gradually healing business confidence and some support from fiscal stimulus. However, activity will remain depressed, especially in H1, as the effects of political turmoil and coronavirus rumble on. Slower-than-expected growth in mainland China poses a downside risk. Our panel projects the economy will contract 0.7% in 2020, which is down 0.7 percentage points from last month’s forecast. Moving to 2021, the panel sees the economy growing 2.4%.
Hong Kong Economy Data
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Hong Kong Facts
|Bond Yield||1.82||3.38 %||Dec 31|
|Exchange Rate||7.79||-0.11 %||Jan 01|
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Hong Kong Economic News
March 4, 2020
The IHS Markit Purchasing Managers’ Index (PMI) plunged to 33.1 in February (January: 46.8), and remained markedly below the 50-threhold that indicates an improvement in the private sector economy over the previous month.
March 2, 2020
Retail sales by volume declined 23.0% year-on-year in January, sharper than December’s revised 21.1% plunge (previously reported: -21.0% year-on-year).
February 26, 2020
The revised GDP reading confirmed the economy contracted at the sharpest pace since June 2009 in the fourth quarter, as political turmoil continued to extinguish economic activity.
February 20, 2020
Inflation dropped to 1.4% in January from 2.9% in December.
February 5, 2020
The IHS Markit Purchasing Managers’ Index (PMI) rose to 46.8 in January (December: 42.1), but remained below the 50-threhold that indicates an improvement in the private sector economy over the previous month.