Hong Kong’s economy has retreated but the recovery is inadequate Business and Economic News

After a record six-quarter fall, economic growth has risen as a result of export growth, despite weak consumption.

Hong Kong’s economy experienced the fastest growth in more than a decade in the first quarter, although the recovery was fluctuating due to exports, which sustained weak consumer spending and slow vaccine spreads.

After falling in a six-quarter record, gross domestic product rose 7.8% from a year earlier, preliminary data showed Monday, surpassing all calculations in a survey of Bloomberg economists. The figures were somewhat distorted a year ago when the low economy stalled, but the quarter-on-quarter expansion, a better reflection of the growth momentum, also surpassed it.

Recent data show a growing export sector, but consumption remains modest. The city’s hotels and retail stores are based on tourism spending, especially on the part of visitors to the mainland, and the closure of borders has harmed these sectors. Low vaccination rates hinder the city’s ability to reopen and fully recover from the pandemic.

“Having a high vaccination rate is important to keep the border between Hong Kong and China open, as well as between Hong Kong and other foreign economies,” said Iris Pan, chief economist at ING Bank NV in Greater China. “Open economic activities without limits will grow slowly.”

Hong Kong has suffered the most difficult economic span in two years in its history, posting unprecedented annual contractions in 2019 and 2020, with waves of political unrest in the city as relations between the US and China deteriorate. Covid19 pandemic.

The economy has recently shown stronger recovery. Exports rose above $ 400 billion ($ 51 billion) for the first time in March, with unemployment falling the most in a month in 2003, below a 17-year high. In terms of values, retail sales rose 30% in February, the first increase in that measure since January 2019.

The government will announce revised first-quarter figures and final projections for full-year growth on May 14th. Finance Secretary Paul Chan has predicted that the economy will expand from 3.5% to 5.5% in 2021, but a bigger revision is likely now, given the strong growth in the first quarter.

Citigroup Inc.’s year-on-year growth forecast rose 2 percentage points to 6%, while economists at Goldman Sachs Group Inc. rose theirs to 9.2% from 4.6%.

However, economic activity remains below pre-recession levels as pandemics and social exclusion continue to weigh on consumer spending and tourism, the government said in a report on Monday. It can be said that the demand for exports will remain strong, “the revival of tourism-related activities will surely be slow due to the still severe pandemic situation around the world,” he said.

“Gradually relaxing social distance is a good way to do homework,” said Raymond Yung, of Australia and New Zealand Banking Group Ltd. Major economists in Greater China. “The relatively slow vaccination rate and variations in virus strain are worrisome. The government will maintain a strong stance on virus control measures.”