HSBC Global Research said Hong Kong's economic performance year-to-date has been mixed. GDP growth slowed to a four-year low of 0.8% in 1Q, as financial market volatility weighed on private consumption and sluggish global trade suppressed exports.
The research house thinks the Fed won't hike interest rates until mid-2017 and China growth will slow only gradually to 6.5% in 2017.
HSBC said property market's demand and supply is expected to be more balanced in the coming years. Meanwhile, retail sales sector may remain weak. Global trade is unlikely to rebound any time soon, meaning the trade and logistics sector will be under pressure.
The implication for Hong Kong is thus one of slower but not dramatically weaker growth.
HSBC lowered its GDP growth forecast to 1.2% (1.5% previously) in 2016 and 1.8% (2% previously) in 2017. Moreover, regulators have a broad range of macro-prudential, regulatory and counter-cyclical tools (such as fiscal policy) at their disposal to help cushion the impact of slower growth.
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