Govt Downgrades 2020 GDP Forecast

The Hong Kong government has further downgraded the city's full-year economic growth forecast because of the negative impact caused by Covid-19.

Officials said on Friday they now expect the economy to shrink between 6 and 8 percent in 2020. That's worse than an earlier forecast of a 4 to 7 percent contraction.

Government Economist Andrew Au said the pact of recovery will depend on how well the city is able to curb the spread of the virus.

Officials made it clear Hong Kong's short-term economic outlook is still highly uncertain. But they also said if the current third wave of coronavirus cases can be contained within a short time – and barring any further sharp deterioration in the external environment – full-year economic performance could fall within the upper half of the range forecast.

But tensions between China and the United States won't help, Au added.

"The tensions between the two countries will create a lot of uncertainty for the global economic outlook. That's something we need to be concerned about."

But he also played down the impact of US sanctions on Hong Kong, saying it would be "manageable".

The government said it will continue to closely monitor the situation and roll out measures as necessary to boost the economy.

In the second quarter, before the latest wave of Covid-19 infections hit Hong Kong, GDP fell by 9 percent year on year and private consumption plunged by a record 14.2 percent. Those figures are in line with an earlier government estimate released late last month.

Hong Kong, like many countries around the world, is in recession amid the coronavirus pandemic. The economy slumped by 9.1 percent in the three months ending March.