Hong Kong's economy will regain stability and growth with epidemic under control despite the downward revision in HK’s 2022 growth, Financial Secretary of the Hong Kong Special Administrative Region (HKSAR) Paul Chan Mo-po said on Sunday. 

This comes after the HKSAR on Friday downgraded its economic growth forecast for 2022 as prolonged COVID outbreaks disrupted the region’s economic performance in the first three months of 2022 and external factors such as higher US interest rates and Ukraine tensions weighed on the local economy.

The Hong Kong economy is expected to expand between a range of 1 percent to 2 percent in 2022, compared with a forecast of 2-3.5 percent previously and a 6.3 percent growth in 2021.

However as long as the epidemic is steadily brought under control and confidence is maintained, Hong Kong's economy is expected to recover and grow slightly, Chan wrote on his blog on Sunday.

Chan said that the pandemic did take a toll on the economy but the impact has been stabilized, citing a rebound in consumption and business conditions.

With the issuance of a new round of consumer vouchers in April, local retail and catering revenue figures for April should show a marked recovery, Chan wrote.

Business confidence has also been stabilized with measures to support employment as Hong Kong's PMI jumped to 51.7 in April from March's 42.0, signaling improvement in business conditions.

Combatting external factors such as rising interest rates in the US, Hong Kong’s monetary authority stepped into the currency markets and bought a total of HK$11.7 billion ($1.49 billion) to bolster the exchange rate and return the currency to its trading band against US dollar.

Despite some capital outflows caused by the recent US interest rate rise Chan said Hong Kong has substantial foreign exchange reserves to defend the linked exchange rate system.

“The market is also constantly adjusting the expectation and absorb the risk of US interest hike. As long as we do well in risk management and contingency planning, Hong Kong’s economy will be able to move forward steadily even in a complex and volatile environment,” Chan said.

Global Times