A panoramic view of the financial area in Hong Kong. (PHOTO/XINHUA)
The structural growth of Hong Kong remains intact despite the global economic downturn and uncertainties surrounding trade growth induced by the heightened geopolitical risks, according to a UBS report on Tuesday.
The investment bank revised down its forecast for Hong Kong economic growth in 2022 to 1 percent from its original 2.2 percent, as global growth remains weak because of factors such as energy price shocks, the erosion of household spending power, and the potential for further disruptions of supply chains, while the pandemic is still a drag domestically.
According to an assessment report released by the International Monetary Fund earlier this month, Hong Kong’s status as a major international financial center has been reaffirmed, and the financial sector has continued to expand and develop even during the pandemic
Yet the bank still believes that the city’s economic growth momentum remains positive in the long run.
“Hong Kong has not fallen into stagflation,” said William Deng, North Asia economist of UBS Investment Bank Research. The impact of high energy prices on consumer prices is likely to be manageable, and the government has significant fiscal resource to absorb further spillover, he said, adding that he expects the city’s GDP growth to rebound to 5.5 percent next year.
The city’s substantial fiscal reserves of over 34 percent of GDP at the end of 2021 provide a strong pool of financial resources to pursue these growth initiatives without increasing government debt, which is a better situation than that of economies facing an increased government debt burden, according to the bank’s report.
Meanwhile, the Guangdong-Hong Kong-Macao Greater Bay Area development plan, the Northern Metropolis development strategy, Hong Kong’s development as a center of renminbi internationalization and wealth management, and growth initiatives launched with Chinese mainland’s 14th Five-Year Plan (2021-25) should help support structural growth.
According to an assessment report released by the International Monetary Fund earlier this month, Hong Kong’s status as a major international financial center has been reaffirmed, and the financial sector has continued to expand and develop even during the pandemic.
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