Hong Kong’s COVID-ravaged economy will return to positive growth territory this year and expand by between 3.5% and 5.5%, as the city opens up and its major trading partner China’s economic prospects improve.
The Asian financial hub was buffeted by a 3.5% contraction last year, as harsh COVID restrictions and softening global demand reduced spending and exports. However, after Hong Kong relaxed its COVID restrictions in January, it is stepping up a drive to attract workers and investments amid rising competition from Singapore.
Analysts expect that the accelerated growth of the Chinese mainland economy, in addition to the removal of restrictions on cross-boundary truck movements, will increase trade between the two neighboring partners. The number of visitors to the city is also expected to witness a strong rebound after Hong Kong ended quarantine requirements for inbound travelers.
What does this mean for me?
To further spur the economy, the Hong Kong government intends to give out cash handouts to all eligible adults this year, with each beneficiary taking home $637 in spending vouchers. The government will also cut taxes on salaries, a move that is expected to benefit 1.9 million taxpayers among the city’s seven million residents. Other measures to aid recovery include energy and transportation subsidies to residents.
Analysts believe that such industries as tourism, trade and real estate are set to ride Hong Kong’s reopening wave, with positive growth effects expected also to strengthen the Hong Kong dollar.