HONG KONG: Hong Kong’s economic growth likely cooled late last year and could slow further to an eight-year low in 2017 unless the city finds a way to attract more tourists and reinvigorate flagging retail sales. Fears of a rise in global trade protectionism are also clouding the outlook for this year, as Hong Kong’s busy port still handles a considerable volume of mainland China’s trade. Visitor arrivals fell nearly 5 percent last year, leading to the worst retail sales slump in nearly two decades. Even the once vibrant financial sector has been plagued with layoffs and dwindling stock market turnover.
That likely dragged fourth-quarter growth down to 1.6 percent from a year earlier, compared with 1.9 percent in the third quarter, according to the median forecast of six economists contacted by Reuters. The former British colony may have failed to grow at all in the fourth quarter from the previous three-month period, economists said. Full-year growth is expected to slow sharply to 1.5 percent from 2.4 percent in 2015 as the city was buffeted early in the year by a slowdown in China. Economists see growth slowing further to 1.3 percent this year, despite recent signs that China’s economy has stabilised and global manufacturing is picking up. “The global environment has become more uncertain and that creates problems for corporate activity making company executives more cautious to expand their operations in China,” said Raymond Yeung, chief economist for greater China at ANZ. Hong Kong’s retail sales shrank for the third year in a row in 2016, hurt by the city’s downturn and fewer tourists, especially from mainland China. [nL4N1FD30D] Tourism did pick up in December and again January, but analysts say it is too early to call for a recovery yet as store closures and lay-offs continue.
A private business activity survey showed the economy broadly stagnated in January, with new orders from China shrinking for the 30th straight month. [nS7N14O00X] Though full-year 2016 growth is expected to come in the middle of the government’s forecast range of 1-2 percent, some analysts believe a prolonged slump may force the officials to nudge expectations lower for the $264 billion economy in 2017. “We expect fourth-quarter growth to have been supported by stronger contributions from household spending and exports, only to be offset by more imports and slower investment,” said Chidu Narayanan, an economist at Standard Chartered in Singapore. Reversing that trend and finding new economic growth drivers will be an immediate challenge for Hong Kong’s next chief executive, who will selected by a 1,200-member election committee stacked with Beijing loyalists on March 26. The slowing economy could fuel more discontent in a city whose population is already under strain from high living costs and a widening wealth gap.
