The outlook for Hong Kong’s economy in the first quarter of 2022 does not appear to be optimistic as consumption-related sectors come under “intense pressure” during the fifth Covid-19 wave, the city’s finance chief has said. It is despite a rebound in line with the global economy last year, he announced during his 2022 budget speech on Wednesday.

Finance Secretary Paul Chan.
Finance Secretary Paul Chan. Photo: HKGov.

Benefitting from pickup in global trade following two years of the pandemic, Hong Kong’s overall exports saw a strong 19 per cent growth last year. Outperforming global economic growth of 5.9 percent, Hong Kong’s economy grew by 6.4 per cent, making a “visible recovery” after two consecutive years of decline, Financial Secretary Paul Chan said.

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Rebound in unemployment

However, the rebound is expected to be undercut as the city grapples with a new wave of Omicron coronavirus cases and subsequent restrictions, Chan said.

Made with Flourish

Although unemployment dropped from its peak early last year from 7.2 per cent to 3.9 per cent in latest provisional figures, Hong Kong’s economic outlook “is not optimistic” for the first quarter of 2022. Deteriorating unemployment and underemployment may be expected, the minister said.

Covid-19 mask population Central
Photo: GovHK.

“Inevitably, economic activities, particularly the consumption-related sectors, will continue to be under intense pressure in the short term,” he said, with growth slowing down to 2 to 3.5 per cent in the second half of the year.

In the future, the forecast for economic growth would average around 3 per cent between 2023 and 2026, with an inflation rate of approximately 2.5 per cent inflation, he said, surpassing pre-pandemic forecasts.

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Selina Cheng is a Hong Kong journalist who previously worked with HK01, Quartz and AFP Beijing. She also covered the Umbrella Movement for AP and reported for a newspaper in France. Selina has studied investigative reporting at the Columbia Journalism School.