Hong Kong Financial Secretary Paul Chan Mo-po delivers the 2022-23 Budget to the Legislative Council via video link on Feb 23, 2022. (PHOTO / HKSAR GOVERNMENT)

Hong Kong’s economy has proved resilient over the past 25 years and is set to make further progress, though external risks such as rampant global inflation and interest-rate hikes present challenges, Financial Secretary Paul Chan Mo-po said in his blog on Sunday.

In the past quarter-century, Hong Kong's gross domestic product doubled to more than HK$2.8 trillion ($357 billion), and the total merchandise trade more than tripled to a record of over HK$10 trillion, ranking sixth globally

Chan said the city is facing an “increasingly complex international environment” as inflation continues to rise around the world, pressuring central banks to raise their respective interest rates. Last week, the US Federal Reserve hiked its benchmark interest rate by 75 basis points, the biggest increase since 1994, to combat its 40-year-high inflation of 8.6 percent.

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Stubbornly high inflation, coupled with more-aggressive and faster monetary tightening by central banks, will weaken global economic growth and could further dent Hong Kong’s export momentum, Chan said, adding that Hong Kong’s base rate will be in lockstep with the US under the 39-year-old Linked Exchange Rate System, though the market liquidity is enough to buy more local dollars.

Following the Fed’s latest interest hike, the Hong Kong Monetary Authority last week raised its base rate by 75 basis points to 2 percent.

Chan nevertheless said Hong Kong’s economy has come a long way in the past 25 years after tiding over myriad challenges, including from the Asian financial crisis in 1998, plus shocks from the 2008 global financial crisis to the most recent pandemic outbreak.

In the past quarter-century, the city's gross domestic product doubled to more than HK$2.8 trillion ($357 billion), and the total merchandise trade more than tripled to a record of over HK$10 trillion, ranking sixth globally. Meanwhile, nearly 4,000 companies chose Hong Kong for their regional headquarters or offices, representing an increase of 57 percent.

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Chan also said Hong Kong’s financial sector, as one of the city’s pillar industries, has been serving the needs of Hong Kong and the country. The value of the stock market rose to over HK$40 trillion from HK$3 trillion in 25 years. Total banking assets more than tripled to HK$27 trillion, and the bond market issuance rose to about HK$400 billion last year.

The finance chief attributed the progress in Hong Kong’s financial sector and the overall economy to the solid support from the central government, the steady development of the whole country, the city’s role in linking the Chinese mainland and the world, innovations in the institution as well as the hard work and flexibility of citizens.

“These figures reflect the proud achievements made by generations of Hong Kong people through their tireless efforts,” Chan said.

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With 2022 marking the 25th anniversary of the establishment of the Hong Kong Special Administrative Region, the city stands from a stronger starting point and will continue to work with humility and confidence to build a brighter future, Chan added.