Nomura expects GDP growth to slow sharply to 0.5% in 2017 from 1.5% 2016, given the city's vulnerability to weaker Chinese growth and higher US interest rates.
The research house expects the housing market to resume its correction in 2017. Inward tourism is likely to remain weak, especially with mainland tourists tightening their belts as growth in China slows and on a stronger effective HKD.
The housing market correction and sluggish tourism will likely drag on private consumption, but Nomura sees a risk of a sharper slowdown in the economy if there is a disorderly unwinding of Hong Kong's outsized financial cycle of excessive domestic
credit and highly elevated property prices.
It added that US President-elect Trump's new policy agenda could pose further downside risk as Hong Kong is the entrepot for a significant amount of business between China and the US.
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