Full-year GDP Now Tipped To Be The Worst Ever

The Hong Kong economy is poised to post its worst annual performance on record, according to latest government projections.

The SAR government now expects the economy to contract by 6.1 percent this year as it revised its full-year forecast on Friday. That's near the high end of the previously estimated range of -6 percent to -8 percent and would be the largest annual GDP decline since the 1998 Asian financial crisis.

The government also updated its third quarter figures with the economy shrinking 3.5 percent, slightly worse than a 3.4 percent decline projected earlier.

Government Economist Andrew Au said while he expects the economy to improve in the fourth quarter, a new wave of coronavirus infections could derail a recovery.

“In our forecast, of course, we assumed that the epidemic situation will remain stable for the rest of this year,” he said.

“If there’s a fourth wave of infections, then probably the actual [outcome] may be somewhat worse than what we forecast.”

The government economist also said inflation this year would be softer than previously thought.

The full-year underlying inflation forecast was revised downwards to 1.3 percent from 1.8 percent.

And the headline inflation was lowered to 0.3 percent.

Au explained that the easing of the inflation was due to lower pork prices, restaurant meals as well as flat rentals.

He said the local inflation is expected to stay mild. “If the local economy recovers and if the global economy recovers, then probably you will see a slight increase in inflation rate in future.”