Financial Secretary Paul Chan Mo-Po yesterday urged residents not to be too pessimistic about a downward revision in Hong Kong's growth forecast for this year, which was last week cut to between 1 and 2 percent for 2022 from previous projections of 2 to 3.5 percent.
In his weekly Sunday blog, Chan also expected the unemployment rate for the February-April period, which is to be released this week, to worsen again as it was amid the peak of the Covid waves in Hong Kong.
But he added that as long as the Covid is under control, the jobless rate and the economy overall are expected to gradually improve.
Meanwhile, Chan said while there have been capital outflows due to interest rate hikes by the US Federal Reserve, the scale is relatively small compared to the cumulative inflow, adding that abundant foreign-exchange reserves will help to maintain the city's currency peg to the greenback.
Also, there were currently no unusual activities in the Hong Kong dollar and derivatives markets, Chan further said.
Last week, the Hong Kong Monetary Authority was forced to intervene in the currency market by buying the local dollar for the first time since 2019.
Economists have downgraded their GDP forecasts for Hong Kong in the second quarter, predicting a contraction of 0.4 percent from a year prior, according to the latest Bloomberg survey. Growth forecasts for the third quarter were also lowered to 2.3 percent while estimates for the fourth quarter rose to 4.1 percent as the city benefits from eased virus curbs.
For the whole year, the economy is seen growing 1 percent, according to the Bloomberg survey conducted before Friday's government data.
Economists raised their inflation projections for the year by 20 basis points to 2.3 percent in the survey, while the unemployment rate is expected to edge higher to 4.3 percent in 2022.
Paul Chan says unemployment and the economy will improve, as long as the pandemic remains under control. Reuters
