Hong Kong Economy Fell 3.5% In 2022

HONG KONG – Data from the Census and Statistics Department revealed that the Chinese territory’s gross domestic product (GDP) declined for the 3rd time in 2022 since 2019, reported Bloomberg on Wednesday evening (1 February, SGT).

Hong Kong’s economy contracted by 4.2 percent in Q4 2022 compared to the same period in the preceding year. While it was not as severe as the 4.6 percent year-on-year fall in Q3, the drop was worse than what economists expected.

For the whole of 2022, the Chinese territory’s GDP dipped by 3.5 percent, surpassing the 3 percent consensus by economists and the city’s government.

“Overall, the economy was very weak,” said ING Group’s chief economist for Greater China Iris Pang. She added that the high vacancy level of office spaces and retail units in Hong Kong have negatively affected employment and spending confidence, in addition to the lack of tourists.

In 2022, Hong Kong’s gross domestic product was greatly impacted by a surge in omicron cases during the onset of the year. This forced the city’s government to impose stringent restrictions, including forcing businesses to close. Commercial activity, including tourism, was also battered by the lengthy, mandatory hotel quarantine for inbound travellers.

Nonetheless, 2023 is off to a good start after Hong Kong and mainland China withdrew COVID-related measures. Based on median estimates of economists polled by Bloomberg, Hong Kong’s economy is forecasted to increase by around 2.8 percent for the entirety of this year.

“Hong Kong’s economy struggled again in the last quarter of 2022, but we think the city is now set to rebound — and we’re raising our 2023 growth forecast to 3.2 percent, up from the 2.3 percent we projected in November,” said Bloomberg economist Eric Zhu.

“The main reason is China’s faster-than-expected border reopening after the abrupt end to its zero tolerance policy on COVID. We expect Hong Kong to reap big benefits in terms of tourism,” he added.

Furthermore, the reopening of China resulted in the International Monetary Fund (IMF) raising its global economic outlook for 2023.