The International Monetary Fund thinks Hong Kong's economy is on a path of gradual recovery, albeit facing multiple headwinds, according to its latest assessment by a staff mission to the city.
The IMF also reaffirmed Hong Kong's status and functions as an international financial center, recognizing that Hong Kong's financial system remains strong with a robust institutional framework, sufficient policy buffers and the smooth operation of the linked exchange rate system.
The delegation visited Hong Kong from November 11 to 22 last year and held discussions with government officials, financial regulators and representatives of the private sector. The delegation considers that the direction and path of progressive fiscal consolidation in Hong Kong over the medium term is appropriate given the current economic situation. The delegation expects that Hong Kong's fiscal space will remain ample, taking into account the new revenue measures, the effectiveness of expenditure control and the support of the gradual reduction in Covid-related expenditures, and that the fiscal deficit will be further narrowed.
The delegation projects that Hong Kong's real gross domestic product will grow by 2.7 percent in both 2024 and 2025. The delegation recognizes the efforts made by the SAR overnment in developing new sources of growth, including promoting the development plan for the Greater Bay Area, increasing investment, and attracting overseas talents and high-end industries to Hong Kong. The delegation also recognizes that it is appropriate for the government to abolish all demand-side management measures for residential properties.
Financial Secretary Paul Chan Mo-po, said the government will continue to reinforce and enhance Hong Kong's position as an international financial centre, and give full play to the city's unique role of connecting with both the mainland and the world under the 'one country, two systems' arrangement.
Hong Kong Monetary Authority chief executive Eddie Yue Wai-man highlighted the IMF's view that the currency peg regime to US dollar remains as the most suitable arrangement for Hong Kong given its highly open economy and large and globally integrated financial services industry. Yue added that HKMA will continue to stay vigilant and safeguard financial stability while enhancing Hong Kong's status as an international financial centre.
(Staff reporter)
