Hong Kong GDP to grow 4% to 5% in 2023

Full-year GDP growth is now expected to fall between 4% to 5%.

Hong Kong’s economy is expected to grow by between 4% to 5% in 2023, according to the Hong Kong government’s latest half-yearly economic report. This extends the 2.9% GDP growth in Q1.

This follows after GDP was reported to have grown by 1.5% in Q2, extending the 2.7% economic growth in Q1.

Overall inflation is also expected to stay moderate in the near term, and external price pressures should recede further. Taking inflation into account, consumer price inflation for the whole year may come between 2% to 2.4%.

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Exports weaken
Exports were weaker in Q2 amidst weak external demand. Total exports plunged by 15.2% year-on-year in real terms, with exports to mainland China, the US, and the EU falling sharply.

In contrast, exports of services grew by 22.9%, and exports of travel services reportedly jumped over eight-fold as visitor arrivals surged in Q2, the report said.

Exports of transport services also rose, in tandem with the continued recovery of inbound tourism, and exports of business and other services.

Labour market, private consumption improve
Domestically, private consumption expenditure reportedly rose by 8.2% in real terms during the quarter. Overall investment expenditure, however, declined by 0.9%, with the government noting tightened financial conditions.

The labour market continued to improve, with the unemployment rate declining by 2.9% in the second quarter, and the underemployment rate at 1.1%.

Looking ahead, the government expects inbound tourism and private consumption to remain major drivers of economic growth for the rest of the year. 

As transportation and handling capacity continue to recover, visitor arrivals should increase further, the report said.

Looking ahead, the difficult global economic environment is expected to continue to weigh on Hong Kong’s exports, although private consumption is expected to continue recovery thanks to improved labor market conditions.

“The improving economic situation and prospects should bode well for domestic demand, though tight financial conditions may impose constraints,” the report said.