Hong Kong Reports Q1 GDP Growth after 2022 Contraction

Chief Executive John Lee said the city’s quarterly gross domestic product had grown 2.7 percent on-year, reversing contractions in the previous four quarters, including a 4.1 percent drop in the last stretch of 2022.

“A series of large-scale promotional events have boosted tourism and consumption and improved the economy,” Lee said at a press briefing. 

“As the mainland economy continues to grow at a fast pace and local aviation capacity speeds up its recovery, I believe Hong Kong’s economy in the second quarter will be better than that of the first.”

Hong Kong recorded one of the world’s highest per capita Covid death rates as it dealt with a wave of the highly transmissible Omicron variant early last year.

A series of restrictions on travel and social gatherings saw chunks of its economy shut down and the city’s exports dwindle, leading to a drop in GDP in all four quarters in 2022.

At the beginning of 2023, Hong Kong’s finance chief unveiled a US$97 billion budget aimed at resuscitating the city’s fortunes.

The revival measures included cash handouts for more than six million people, a series of tax breaks and welfare allowances, and a new campaign to revive tourism in the city.

First quarter private consumption expenditure increased by 12.5 percent year-on-year, compared to 1.7 percent in the preceding quarter.

“Private consumption expenditure showed notable growth as sentiment improved sharply along with the removal of anti-epidemic measures in both Hong Kong and the mainland,” a government spokesperson said.

Both import and export of goods registered declines, by 14.5 percent and 18.7 percent respectively, though the figures had improved compared to the fourth quarter of 2022.

Exports continue to face “significant challenges” as slower growth in advanced economies will diminish external demand, the spokesperson added.

Officials from the International Monetary Fund said last week that Hong Kong’s government finances are “still in a very strong position”.

Thomas Helbling, deputy director of the IMF’s Asia and Pacific Department, said the government was “gradually unwinding” fiscal support policies implemented during the pandemic.

Hong Kong entered a deepening recession in 2019 and 2020 after the former British colony was roiled by pro-democracy protests and the start of the pandemic.

The city found brief respite in 2021, as its strict Covid-19 controls largely kept it virus-free, with the economy rebounding by 6.4 percent — gains later wiped out by the 2022 outbreak.

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