As we welcome the new lunar year this month, Covid-19 continues to loom large. Consequently, our economic prospects will be determined largely by the path of the pandemic in the next few months.
However, with vaccination programmes now being rolled out around the world, we hope we will soon halt the spread of this deadly virus, and see an end to the travel and social restrictions that have hit our economy so hard.
Another reason for cautious optimism can be found in recent statistics that show Hong Kong’s economy starting to recover in the second half of last year. In the third quarter of 2020, overall GDP fell by 3.5% – a significant improvement on the 9.0% drop in the second quarter. In November, exports and imports were both in positive territory, with 5.6% and 5.1% growth respectively, compared with the same month in 2019. And the financial sector actually remained in good health throughout the year. These sectors make up a considerable proportion of Hong Kong’s overall economy, so this is welcome news.
However, the city’s recovery has been patchy and other sectors, particularly those depending on tourism, have continued to struggle. The current unemployment rate, at 6.6% is a concern, albeit not a surprise. We anticipate that a return to normal business operations will see the revival of badly hit sectors, and a return to a healthy employment rate.
Hong Kong will likely continue to face challenges from the global environment. Countries around the world, including the United States and Britain, have seen soaring Covid infection rates, making their economic recovery more difficult. Another outstanding issue is global trade tensions, but we hope that the new United States administration will take a more cooperative approach.
On a positive note, we are in an excellent position to benefit from the healthy economic environment in the Mainland. The ongoing opening up in the Greater Bay Area, in particular, will provide more opportunities for Hong Kong businesses and drive our recovery.
Optimism about Hong Kong’s outlook is shared by outside observers: the IMF, for example, has predicted a growth rate of 3.7%, while the Asian Development Bank has forecast 5.1%. Assuming we manage to get Covid under control, we agree that 2021 may be a year of recovery, and HKGCC has forecast a reversion to positive growth of 3.5% in 2021.
As we move into the Year of the Ox, I would like to take this opportunity to wish all our members good health and prosperity. We hope that the new lunar year will bring calm and certainty as our economic recovery takes root.