HONG KONG: Hong Kong’s economy proved more resilient than expected in the third quarter, despite the Chinese mainland’s slowdown and weaker retail sales as fewer tourists came across the border on shopping sprees.
As an open economy on China’s doorstep, Hong Kong is vulnerable to headwinds that now include a slowdown in the world’s second-largest economy and broader uncertainty over US monetary policy, due to the city’s currency peg to the dollar.
The financial hub’s economy grew a seasonally adjusted 0.9 percent quarter on quarter in the three months to September, government data showed yesterday, picking up from a 0.4 percent pace in the second quarter and 0.7 percent in the first quarter.
From a year earlier, the economy grew 2.3 percent in the third quarter. Four economists surveyed by Reuters estimated the economy would grow 0.4 percent in the third quarter from the second, and 1.8 percent from a year earlier.
Hong Kong said the outlook for merchandise exports was “bleak,” while inbound tourist number would remain weak, piling pressure on retailers with possible job losses.
“I can’t be overly optimistic,” said Helen Chan, a government economist, when asked about economic growth next year. “Going forward, there are many uncertain factors.”
Despite these pressures, Chan said robust domestic demand for goods and services, had helped buttress the economy, with the government seeing economic growth of 2.4 percent for the full year, still within its previous 2-3 percent range.
Tourism under pressure
China’s anti-corruption campaign and a weaker yuan have curbed mainlanders’ spending while a volatile stock market has hurt retailers.
Hong Kong’s high rents and wages have also hurt companies as fewer Chinese mainland tourists, who make up about three quarters of overall visitors, come to snap up handbags, watches and designer clothing.
“Given the slowdown in inbound tourism, the possible spillover on the job market remains a source of concern,” Chan said.
Earlier this week, China’s top jewelry retailer by market value, Chow Tai Fook Jewellery Group, said it expected first-half net profit to sink by up to 50 percent due to subdued spending in Hong Kong and Macau.
