The city's economy shrank 4.1% in the fourth quarter of 2022. On a seasonally-adjusted quarterly basis, the economy grew 5.3% between January and March. The government has maintained its economic growth forecast for 2023 at between 3.5% and 5.5%, after a 3.5% decline in 2022. "If the economic recovery continues, annual economic growth is expected to be close to the upper limit of the range," government economist Adolph Leung told a news conference.
The improving economic situation and prospects should boost domestic demand, though tight financial conditions will remain a constraint, Leung said in a separate statement.
He added that domestic cost pressures may increase alongside the economic recovery while overall inflation will likely pick up in the rest of 2023, with the forecast rates of underlying and headline consumer price rises for the year staying at 2.5% and 2.9% respectively.
But Samuel Tse, an economist at DBS Bank, said it should
be noted that the external headwinds stemmed from a slowdown of
the U.S. and European economies.
"Also, the pace of recovery of the Chinese economy is
unevenly distributed," said Tse.
HSBC Global Research on Friday raised its economic
growth forecast for Hong Kong to 5.0% in 2023 from 3.8% due to a
more front-loaded recovery.
"Downward pressures still weigh on the economy. Weak
global demand may keep goods trade muted while high interest
rates could continue to dampen investment," HSBC cautioned in a
research note. "But we expect the reopening and recovery to more
than offset these pressures."
(Reporting by Twinnie Siu and Donny Kwok; editing by John
Stonestreet and Mark Heinrich)
