Hong Kong Forecasts Economy to Slow in 2019 Amid Trade Tensions

(Bloomberg) -- Hong Kong’s government maintained its forecast for gross domestic product growth this year at between 2% and 3%, as the city grapples with the fallout from the trade war between the U.S. and China.

In a release revising up first quarter GDP growth to 0.6 percent from a year ago, the government said the outlook is currently subject to a “high level of uncertainty.” Economists surveyed by Bloomberg see the expansion coming in at 2.3% this year, down from 3.0% in 2018.

Key Insights

  • The forecast matches the outlook made by Financial Secretary Paul Chan in February during his annual budget
  • Hong Kong’s currency is once again approaching the weak end of its trading band against the greenback amid an escalation of tensions between China and the U.S.
  • Hong Kong’s record-breaking property market is set to accelerate again, after a brief decline at the end of last year
  • “If U.S.-Mainland trade tensions do not show any easing in the near term, they would pose a drag on the global economy, and the Hong Kong economy would inevitably face greater downward pressure,” the government said

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  • The government’s forecast for 2019 inflation was also maintained, at 2.5%
  • Compared to the previous quarter, first quarter GDP growth was also revised up to 1.3% from 1.2% in the advance reading

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