Prolonged border closure stifling recovery: HKGCC

The Hong Kong General Chamber of Commerce (HKGCC) has slashed its 2022 Hong Kong economic forecast to -0.5 percent, down from its February estimate of 1.2 percent.

More than two-and-a-half years of Covid-19 restrictions are taking a heavy toll on businesses and the economy, exacerbated by ongoing supply chain bottlenecks and the war in Ukraine, the chamber said.

Chief executive George Leung Siu-kay said the conflict in Ukraine and growing geopolitical tensions have fueled global inflation, which has led the US Federal Reserve and other central banks to aggressively raise interest rates.

The resultant squeeze on consumers' spending power, both domestically and in global markets, could have dire consequences on business confidence and their willingness to invest, he said.

"The continued closure of the border between Hong Kong and Mainland China, as well as with the rest of the world, is impeding investment decisions and stifling any prospect of economic recovery. We need a concrete timetable to reopen Hong Kong to ensure we can continue to attract talent to the city and businesses to invest here," said Leung.

On the other hand, headline inflation in 2022 was predicted to be 2.2 percent, which is 0.2 percent points higher than HKGCC's February prediction.

The HKGCC also expects retail sales to slump 3 percent this year, higher than the 2 percent estimated in February. The estimate for merchandise exports growth changed the most from the previous estimate, which declined 4 percentage points to 2 percent.

However, in HKGCC's prediction, the predicted unemployment rate shows an improvement, from 4.8 percent to 4.3 percent.