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Thursday, October 9, 2014, 08:56

HK’s growth forecast lowered to 2.2%

By Lin Jing in Hong Kong

Hong Kong’s annual Gross Domestic Product (GDP) growth forecast has been lowered from 3.4 percent to 2.2 percent as a result of the ongoing “Occupy Central” campaign, according to the latest economic projections by the University of Hong Kong(HKU).

“The current street protests in Hong Kong will certainly restrain the city’s economic growth as local consumption goes down along with reduced demand for services by visitors, and a subdued investment climate,” said HKU Economics Professor Richard Wong Yue-chim.

HK’s growth forecast lowered to 2.2%The forecast for the SAR’s GDP growth in the third quarter has also been readjusted to 2.4 percent — from the 3.7 percent originally expected, amid a shrinking demand for exports of services and weaker local demand.

The volume of retail sales, however, grew by 2.8 percent in August this year, reversing weakness in the past six months. But, given a reduction in tourist spending and lower domestic demand, retail sales are projected to slip in the third quarter.

For the fourth quarter of 2014, HKU expects retail sales to deteriorate by 2 percent, and fall by 1.2 percent for the whole year.  

Wong Ka-fu, principal lecturer at HKU’s School of Economics and Finance, warned that if the number of visitors and retail sales decline by 10 percent for one month, the GDP will fall by 0.4 percent this quarter, while the unemployment rate will rise by 0.1 percent.

“If the current situation persists for three months, Hong Kong’s economy will suffer, with the GDP declining by 1.2 percent and the jobless rate going up by 0.2 percent,” he said.

Wong added that an unstable political environment will deter investors, especially in those areas occupied by protesters.

The city’s GDP growth in the fourth quarter is forecast to be at 2.1 percent, compared with the same period last year. 

The GDP revision reflects a weaker and uncertain external development, slower economic recovery, worries about further interest rate hikes in the US, as well as weaker economic performance on the mainland.

The Hong Kong Macroeconomic Forecast has been conducted by HKU on a quarterly basis since 1999. It aims to provide the community with timely information to help in tracking  short-term fluctuations of the economy.

Gladdy Chu contributed to this story.


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