People use their smartphones along the Victoria Harbour waterfront in Tsim Sha Tsui district in Hong Kong, China, July 7, 2020. (PHOTO / BLOOMBERG)
Hong Kong’s unemployment rate is expected to drop to 5.6 percent by the end of 2021 as the local economy may rebound in the second half of the year, according to Citibank.
“The Hong Kong economy is expected to see a continued revival, but the key element here remains when we can resume normal travel with the Chinese mainland,” Wong Pak-ling, Citibank’s head of investment strategy and portfolio advisory, told a news conference in Hong Kong on Monday.
Citibank said that some cyclical industries, such as tourism, hospitality and real estate, are expected to rebound next year with the global economic recovery
Citibank said that some cyclical industries, such as tourism, hospitality and real estate, are expected to rebound largely next year with the global economic recovery.
The Hong Kong government reported in mid-June that the seasonally adjusted unemployment rate in the March-to-May period had dropped to 6.0 percent, down from 6.4 percent in the February-to-April period.
Citibank also said that Asia will become more important economically in the following decades, and China’s economy will continue to grow, benefiting sectors such as e-commerce and logistics.
ALSO READ: HK jobless rate at 17-year high, residents' income down 3.8%
“After the pandemic, we think the governments will put more money in the research and development on healthcare and telemedicine,” Wong said. “We need to pay attention to these big trends and maximize the value of investment portfolios.”
Because Chinese stocks are now included in the international index, and foreign investors might reserve more renminbi assets, Citibank is optimistic about China’s currency. “If the mainland retains the inflation in imports and a good performance in exports, the renminbi probably will continue to go up,” Wong said.
Citibank believes that the renminbi will strengthen to 6.3 yuan to the dollar in the following six to 12 months, and 5.6 yuan to the dollar in the long term.
Citibank estimated that with large-scale vaccination programs, global GDP growth might reach 6 percent in 2021, while Hong Kong’s GDP is estimated to be 6.2 percent this year, and 4.5 percent in 2022.
READ MORE: HK$120b relief package to put city back on track