Hong Kong’s economy grew less than expected in the third quarter of this year, suggesting the Asian financial hub’s post-pandemic boost may be fading.
Gross domestic product rose 4.1% in July to September from a year earlier, according to advance estimates released by the government on Tuesday. That’s worse than the 5.2% estimated by economists, albeit faster than the second quarter’s 1.5% pickup.
The figure benefited from a low base last year, when GDP fell 4.5% over the same period as pandemic isolation still battered the financial hub.
The lower-than-expected growth underscores the headwinds Hong Kong continues to face, despite a rebound in tourism arrivals since the city reopened its border at the start of the year.
“Inbound tourism and private consumption will continue to underpin economic growth for the rest of the year. More visitors could be received as handling capacity recovers further,” a government spokesperson said in a press release accompanying the data release.
“Yet, the difficult external environment amid increasing geopolitical tensions and tight financial conditions would continue to weigh on exports of goods and investment and consumption sentiment,” the spokesperson added.
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The modest recovery suggests the government’s efforts to stimulate consumption, most recently through a campaign called “Night Vibes Hong Kong,” may not be enough to support growth.
Chief Executive John Lee said the global environment remains challenging in his policy address last week, when he cut taxes on some property purchases and stock trades.
Lee is also looking to attract business and talent to the city to maintain its position as a premier financial hub in Asia against rivals such as Singapore. In the long term, Hong Kong’s economy is threatened by an aging population, a demographic problem that Lee has sought to counter by offering new parents a one-time baby bonus of HK$20,000 ($2,556).
Economists surveyed by Bloomberg forecast a 4% growth for the Hong Kong economy this year. The government will release final GDP figures on Nov. 10.
