Hong Kong’s economy grew at a slower pace in 2024 as stagnant consumption and a lackluster property sector weighed on activity, highlighting the risks ahead for Asia’s financial capital amid a looming trade war.
Gross domestic product rose at a 2.5 percent annual pace last year, according to advance estimates from the Census and Statistics Department Monday, slowing from 3.3 percent in 2023 and matching the government’s forecast.
Growth picked up to 2.4 percent in the fourth quarter, from an upwardly revised 1.9 percent in the prior three-month period. The result slightly outperformed economists’ estimate of a 2.3 percent increase.
Despite the quarterly acceleration, the annual slowdown underscores the economy’s struggle to regain momentum following the Covid pandemic and widespread protests in 2019.
Consumers are reluctant to spend after a dip in housing prices, hitting retailers and investment that already suffered from an exodus of international residents and pullback in Chinese spending. The value of retail sales fell 7.3 percent in 2024, separate data show, led by jewelry and valuable gifts, supermarket goods and clothing.
More risks lie ahead, as President Donald Trump plans 10 percent tariffs on China — by far Hong Kong’s largest trade and economic partner — and 25 percent levies on Canada and Mexico.
The International Monetary Fund last month cut its growth forecast for the city to 2.7 percent in 2025, as Trump’s tariffs are seen hitting China’s economy.
The government data showed private consumption continued to fall in the October-December period, with a 0.2 percent contraction. Goods exports moderated to 1.2 percent from 4 percent in the previous period, indicating a slowdown in overseas demand even ahead of any upheaval in global commerce.
Fixed capital formation, or overall investment, fell for the first time in six quarters.
“Trade protectionist policies implemented by the US may disrupt global trade flows and adversely affect Hong Kong’s goods exports,” a government spokesman said. “They may also lead to a slower pace of interest rate cuts in the US and keep the Hong Kong dollar strong for longer.”
Officials sought to project optimism, adding in a statement that China’s “proactive policy” to boost growth is set to boost market confidence and benefit the city
The quarterly economic data likely got a boost from China’s stimulus measures, announced September, and easing interest rates. At the same time, it may be tough to sustain those gains as the world’s second-largest economy takes a hit from US levies while the Federal Reserve is expected to slow the pace of rate cuts as inflation remains stubborn.
Hong Kong’s government late last year revised down the growth outlook for 2024 to the lowest end of their earlier forecast. That’s after third quarter data showed the slowest expansion in five quarters.
In recognition of the sluggish economy, Hong Kong Chief Executive John Lee boosted investment and business links with mainland China and eased housing measures in his policy address in October.
(Bloomberg)
REUTERS
