What can lead Hong Kong’s economy to rebound

Economists predict economic growth of 3.5%-4.0% for Hong Kong. 

Despite Hong Kong’s economy shrinking in 2022, economists are positive about the city’s recovery this year.

Felix Tong, Hang Seng Bank economist, expects the city’s economy to rebound primarily due to a pick-up in consumption activity.

Tong said the reopening of the Hong Kong economy and stronger growth of the mainland economy will also support the city’s recovery in 2023.

Hong Kong’s opening has led to better performance of the tourism industry, which is closely linked with the labour and retail markets, said Thomas Shik, chief economist of Hang Seng Bank.

“The recovery of the labour market and the wider economy in Hong Kong hinges on a significant improvement in the tourism sector this year. However, there are early signs of improvement in the economic data for the first two months of the year,” Shik said.

“The revival of the retail sector is heavily dependent on the increase in the number of tourists,” added Shik.
In February, the total number of tourists rose to about 1.46 million.

Apart from the resumption of tourism activities, Tong and Shik anticipate that stronger
growth in the mainland economy will provide support to Hong Kong’s domestic economy. 

“As Hong Kong's closest trading partner, a stronger mainland economy is likely to facilitate the recovery of the domestic economy through an increase in cross-boundary business activities,” Tong said.

Shik, however, warned of downside risks that may affect the city’s recovery. 

“The most significant risk is the global economic slowdown, as evidenced by the weakness in the trade sector in the first month of the year. Although year-on-year statistics may improve later in the year due to a more favourable base effect, a slowdown in the global economy will continue to impact external trade and other related sectors,” Shik said.