HK needs to 'stay on guard' despite economic recovery

Eunice Lam

Hong Kong's economy will improve quarter by quarter as an economic revival has just begun, but authorities need to strengthen policies and stay on guard against uncertain developments in foreign economies, Financial Secretary Paul Chan Mo-po says.

Writing in his blog yesterday, Chan said the Happy Hong Kong campaign and the return of foreign visitors have boosted local consumption, with caterers recording an 82 percent year-on-year profit increase of HK$27.6 billion.

He said the campaign has brought the city a joyful atmosphere, while the HK$3,000 consumption vouchers disbursed last month have also injected impetus into the market and stimulated the retail and catering industries.

The city saw 2.7 percent economic growth in the first quarter this year amid the influx of tourists, which has prompted a rebound in retail sales, private consumption expenditure, service exports and fixed investment.

But overall export of goods declined 18.7 percent from last year.

Although the local economy rebounded after a contraction through the last four quarters, Chan said the city's economic recovery was still at an early stage.

"These figures reflect that Hong Kong's economic recovery is still in an early stage and needs to be strengthened," he wrote. The US Federal Reserve's decision last week to raise interest rates by a quarter percentage point had added pressure to the city's economic recovery.

But Chan remained confident in the city's economy, saying: "I believe Hong Kong's economy will improve quarter by quarter, and this year's performance will be better than the previous one."

Chan also officiated at the opening ceremony of the Gourmet Marketplace in Sha Tin on Saturday. The two-day food fair, featuring stalls offering Chinese cuisine and local snacks, was one of the events under the government's Happy Hong Kong campaign.