Credit Suisse revised up its HK 2017 GDP growth forecast to 2% from 1.7% previously.
The research house said a stronger-than-expected growth rebound, stabilising Chinese tourist visitations and relatively muted impact on the property sector from US rate hikes have prompted it to be less pessimistic on Hong Kong's growth momentum this year.
CS thinks the contraction on Mainland Chinese tourist visitations is likely to stabilise soon, minimising its drag over retail sales. It expects Hong Kong's retail sales to revert to a mild single-digit growth in 2017, providing support to overall GDP growth.
CS expects consumption and investment activities to slow on higher interest rates, but empirical evidence shows that the effects are mixed during the past three US rate hike cycles.
The research house thinks the impact from this current rate hike cycle is not likely to
be as drastic as was seen in 1997-98. Residential properties are more affordable now than during the AFC period, while highly liquid interbank balances reduce the risk of a HIBOR spike.
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