Visitors enjoy the view of Victoria Habour at the Avenue of Stars in Tsim Sha Tsui, Hong Kong on Jan 2, 2023. (PHOTO / CHINADAILYHK.COM)

Hong Kong’s economy is forecast to grow mildly by 2.8 percent in 2023, reversing last year’s downward trajectory in spite of an almost certain global recession, according to the latest research released by the Bank of China (Hong Kong) on Tuesday.

The bank attributed its upbeat assessment mainly to the reopening of the boundary with the Chinese mainland, saying it is still factoring in the pickup in economic activities and does not rule out the possibility of upgrading its initial estimate.

The Hong Kong Special Administrative Region government in November cut its full-year forecast for 2022 to a 3.2 percent economic contraction

Since Jan 8, 60,000 people per day have been allowed to travel to and from Hong Kong and the mainland via seven control points without having to undergo a period in quarantine. The cross-border high-speed railway service also resumed on Jan 15.

READ MORE: HK economy expected to post modest gains in 2023

“The resumption of quarantine-free travel between Hong Kong and the Chinese mainland will give full play to the former’s role as a ‘super-connector’, steering its economic growth back on track,” said Qu Kang, deputy general manager of the Strategic Planning Department at Bank of China (Hong Kong).

The Asian financial hub took a battering from a clutch of global headwinds last year. The Hong Kong Special Administrative Region government in November cut its full-year forecast for 2022 to a 3.2 percent economic contraction after the city’s GDP fell for three straight quarters.

Qu nevertheless cautioned that Hong Kong’s export outlook will continue to reel from geopolitical tensions and the global economic downturn amid major central banks’ monetary tightening as well as the lagged impact of interest rate hikes.

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Bullish mood propelled global fund managers into hoovering up Hong Kong-listed shares. As of Tuesday, the benchmark Hang Seng Index has risen more than 7 percent to 21,577.64 from the beginning of the year.

Ding Meng, senior economist at Bank of China (Hong Kong) described the bonanza in Hong Kong’s stock market as a “normalization of valuations”, with subsequent rallies hinging on overall economic recovery.

“It’s reasonable to see Hang Seng Index float between the range of 22,500 to 25,000 points this year,” Ding added.