Hong Kong: GDP contracted 1.2% in 2019 – UOB

UOB Group’s Economist Ho Woei Chen, CFA, assessed the GDP figures in Hong Kong during last year.

Key Quotes

“Hong Kong’s advance 4Q19 GDP contraction turned out to be better than market’s expectation but in line with our forecast, at -2.9% y/y (Bloomberg: -3.9%, 3Q19: - 2.8%). On a seasonally adjusted basis, GDP contracted for the third consecutive quarter at -0.4%q/q in 4Q19, extending the recession in Hong Kong though the pace of contraction has eased from -3.0% in 3Q19. For the full-year 2019, Hong Kong economy fell 1.2% (2018: 2.9%), recording its first contraction since the Global Financial Crisis in 2009 when it slumped by 2.5%.”

“All the key expenditure components contracted in 4Q19, with the exception of government spending as authorities continued to roll out more stimulus measures to buffer the economy from ongoing protests and the US-China trade tensions.”

“We are maintaining our 2020 GDP growth forecast for Hong Kong at 1.2% for now. Unlike the Severe Acute Respiratory Syndrome (SARS) in 2002-03 when Hong Kong was the epicenter of the outbreak, the situation appears to be more contained for the current 2019-nCoV outbreak, as only about 2% of the infections are outside mainland China.”

“The government is also expected to announce relief measures during Budget 2020/21 also on 26 February which is likely to mitigate further growth downside.”

“So far, the Hong Kong government had announced a total of HKD25 bn of support measures since the street protests intensified. Taken together, these slew of measures are worth around 1.0% of GDP and might have softened the impact of growth headwinds in 4Q19.”