‘Very high chance’ Hong Kong will end year in recession: Finance chief

'Very high chance' Hong Kong will end year in recession: Finance chief

HONG KONG: Hk is set to end the year in the midst of a full-on recession, the city’s finance chief cautioned on Thursday (Sep 22), as COVID-19 controls and spiralling interest rates hammer the particular economy.

“There is a very high chance for Hong Kong to record an adverse GDP growth with this year, ” Monetary Secretary Paul Chan told reporters.

“Hong Kong continues to be raising interests in a pace that was by no means seen in the past three decades, ” he additional.

The Chinese language city’s monetary policy moves with the Government Reserve because its currency, one of the cornerstones of its business centre reputation, is chosen to the US buck.

The Fed’s hawkish rate hikes, aimed at curbing inflation, come at an specifically difficult time for Hk because it will additional dampen sentiment each time when the economy is struggling.

The town is currently in a technical recession – recording two consecutive quarters of negative growth this year.

For more than two . 5 years, Hong Kong’s government has adhered to a version of China’s zero-COVID policy, enforcing strict coronavirus settings and mandatory pen for international arrivals.

Quarantine, once as long as three weeks, has now been reduced to three days and the government offers signalled it may quickly join the rest of the planet in scrapping traveling curbs.

Chan signalled his assistance for making travel and business easier.

“The aspects related to the pandemic need to continue to improve in order for us to see bigger investments because people are more cautious inside a high interest rates atmosphere, ” he stated.

Hong Kong is among the world’s wealthiest places, per capita : although there is created inequality.

The town has healthy financial reserves but they have been depleted by the pandemic.

On Weekend, Chan said the particular fiscal deficit is usually expected to balloon in order to HK$100 billion (US$12. 7 billion) this year, twice initial quotes.

The Fed’s rate hikes strike Hong Kong’s stock exchange which fell as much as 2 . 6 % on Thursday, to 17965. 33, the lowest since December last year.

The Hang Seng Index has been one of the worst performing best bourses in the past two years, shedding more than twenty two per cent since the begin of January subsequent last year’s 14 per cent drop.

The Hong Kong Financial Authority followed the Fed’s hikes plus warned banks might soon lift their particular prime interest rates afterwards this year, making asking for more expensive.

Up to now major banks for example Standard Chartered plus HSBC have ignored following the Fed but the HKMA has warned it is “very likely” it may have to follow suit, especially if a lot more Fed hikes come in November.

“The public should be prepared for the Hong Kong money interbank rates to increase further, ” HKMA Chief Executive Eddie Yue told reporters upon Thursday.

Hong Kong also saw a recession in 2019 when months associated with huge and occasionally violent democracy protests rocked the city.