In this photo taken on April 7, 2022 in Hong Kong, pedestrians pass by posters promoting consumption vouchers. (ANDY CHONG / CHINA DAILY)
DBS expects the Hong Kong economy to recover this year as spending will increase thanks to e-vouchers.
Samuel Tse Ka-hei, economist of Group Research at DBS Bank (Hong Kong), said at a media briefing on Wednesday that consumption vouchers will play a significant role in boosting the city’s retail sector in the following months. Retail sales increased more than 10 percent year-on-year in August and October, when cash vouchers were distributed last year, he said.
However, GDP growth during the second quarter “might still be in mild contraction, as stringent social distancing rules, including the ban on dine-in services after 6 pm, had remained for most of April,” Tse added.
The Hong Kong government started lifting social distancing measures on April 21, allowing dine-in services at restaurants until 10 pm and increasing the number of allowed guests per table from two to four. Venues like gyms, beauty parlors, cinemas and religious sites were allowed to reopen, with seating capacity capped at 50 percent.
GDP growth during the second quarter “might still be in mild contraction, as stringent social distancing rules, including the ban on dine-in services after 6 pm, had remained for most of April,” said Samuel Tse Ka-hei, economist of Group Research at DBS Bank (Hong Kong)
The authority will further relax restrictions on Thursday, including allowing eight diners per table at restaurants.
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The first round of HK$5,000 ($637) electric consumption vouchers has been distributed to over 6.3 million eligible registrants in April. The government will begin with the second round of e-vouchers in the middle of the year.
DBS forecasts the unemployment rate in Hong Kong to remain almost the same level as the first quarter — 5 percent — and hovering between 4.9 percent and 5 percent in April, but declining to 3.7 percent by the end of 2022.
Tse said the unemployment rate of sectors hard-hit by the pandemic, such as construction, catering and retail, will improve gradually this year.
Hong Kong’s inflation rate is expected to climb to 2.2 percent in 2022, mainly driven by food prices, he said.
DBS downgraded the GDP forecast of Hong Kong in 2022 from 2.4 percent to 1.7 percent. Tse said the major lagging factor of the whole year GDP growth is the poor economic performance in the first quarter.
Hong Kong’s economy shrank by 4 percent in the first quarter compared with a year earlier, according to the data released by the Census and Statistics Department on Tuesday. The Hong Kong government expects the city’s GDP to grow by 2 to 3.5 percent this year, following a 6.4 percent expansion in 2021.
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DBS also forecasts that property prices will stay flat for 2022, plagued by the downward pressure from the Hong Kong stock market and the expected US interest rate hikes.