Hong Kong’s 2023 Economy Grows by 3.2%, Falls Short Amid Global Challenges

Hong Kong’s economy witnessed a rebound with a growth of 3.2% in 2023, following a contraction in 2022, according to advance estimates released by the Census and Statistics Department. The fourth quarter of 2023 showed a year-on-year GDP expansion of 4.3%, contributing to the overall recovery. However, the growth fell short of earlier government projections, with the full-year figure aligning with the 3.2% forecast by Financial Secretary Paul Chan Mo-po in November.

The government spokesperson acknowledged the city’s economic revival in the fourth quarter, highlighting inbound tourism and private consumption as key drivers. Looking forward, concerns were raised about the challenging external environment, posing pressures on Hong Kong’s goods exports in 2024. The situation might stabilize later in the year if advanced economies implement expected interest rate cuts.

Private consumption experienced a 3.5% rise in the fourth quarter compared to the previous year, with government expenditure decreasing by 5.2% during the same period. For the entirety of 2023, private consumption surged by 7.4% year-on-year, while government expenditure declined by 4.3% compared to 2022.

Economist Samuel Tse Ka-hei noted the relatively slow rebound in private consumption, attributing it to challenges in real estate and stock markets. He pointed out that declines in these markets, coupled with a high-interest environment, have made residents hesitant to spend money. Additionally, the import of services outpacing the export of services indicated higher spending abroad than incoming expenditures.

Hong Kong’s recovery has been gradual, influenced by weak global demand, geopolitical tensions, and mainland China’s sluggish economy. The city’s exports saw a 7.8% plunge in 2023 compared to the previous year. Despite a rebound in the fourth quarter, tourism figures remained at about 55% of the 2017-2018 average, with 33.9 million visitors in 2023.

The government spokesperson expressed optimism about the potential increase in visitor arrivals, supported by recovering handling capacity and government efforts to promote mega events. Various measures and rising household income were expected to sustain private consumption.

Thomas Shik Chun-sing, head of economic research and chief economist at Hang Seng Bank, anticipated further recovery in 2024, predicting a 2.8% growth rate for the entire year. He emphasized the challenges faced by Hong Kong’s external trade prospects and anticipated support from anticipated rate cuts by the US Federal Reserve in the second half of the year.

Discover supply chain news insights on The Supply Chain Report. Enhance your international trade knowledge at ADAMftd.com with free tools.

#HongKongEconomy2023 #GDPGrowth #FinancialForecast #PaulChanMopo #PrivateConsumption #TourismBoost #EconomicRecovery #CensusStatisticsDept #SamuelTseKahei #HangSengBank #GlobalDemand #HongKongExports #InterestRateImpact #VisitorArrivals #RealEstateChallenges