HK economy snaps two years of negative growth

The government said on Friday the Hong Kong economy grew by 6.4 percent in 2021, ending two years of contraction.

A government spokesman noted double-digit growth in exports and stronger private consumption helped fuel the rebound last year, while the still-frozen inbound tourism continued to pose a drag.

According to advance estimates by the government, fourth-quarter economic growth reached 4.8 percent, down from a 5.5 percent increase in the July-September quarter.

Looking forward, the government said it expects the economy to expand further this year but uncertainties remain, such as the local pandemic situation and high inflation in some major economies.

Gary Ng, an Asia Pacific economist at Natixis, warned of the impact of the Omicron variant.

“If it is only about the rising cases, it doesn’t necessarily create a very sharp slowdown in the economy. However, in combination with strict government measures, it will mean a lot of loss in business hours, and also means the large part of industry which had rebounded quite strong in the second half of last year actually will face ongoing uncertainties,” Ng said.

He said that includes trades such as retail and catering.

Ng also said the government could offer another round of consumption vouchers to help boost the economy.

“Even though the size may not be comparable to last year, I think HK$3,000 to HK$4,000 per citizen will still be quite an affordable measure for the government because it is only 0.8 to 1 percent of GDP.”