This undated photo shows people crossing a road in the Central district of Hong Kong. (PHOTO PROVIDED TO CHINA DAILY)
With anti-coronavirus restrictions expected to ease in the second half of the year amid an accelerated vaccination rate, Hong Kong’s economy could expand by 5 to 6 percent this year, an OCBC Wing Hang Bank economist said.
For Hong Kong to achieve a strong economic recovery, a further relaxation of social distancing measures and a border reopening — both of which rely on mass vaccinations in the city — are required, Carie Li Ruofan said on Tuesday.
In the wake of incentives from the government and the business community, Hong Kong’s vaccination rate is accelerating, and it is expected that coronavirus-related restrictions will be eased in the second half, she said.
For Hong Kong to achieve a strong economic recovery, a further relaxation of social distancing measures and a border reopening — both of which rely on mass vaccinations in the city — are required, Carie Li Ruofan said
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The city’s success in controlling the virus and the launch of the digital consumption voucher program are expected to push up domestic demand and drive economic growth, although external demand could weaken in the second half, the economist said.
“Hong Kong’s economic growth in the first half of the year was largely contributed by external demand,” Li said. “But as the pandemic is further controlled, the city’s GDP will mainly be supported by domestic demand.”
Some sectors may benefit from the possible broader recovery in the near term, she said. While the banking sector could benefit from the soon-to-be-launched Wealth Management Connect program, the property sector could see a boost, with housing prices likely to hit a new high this year because of low interest rates and a shortage of supply.
However, she also warned that the city’s relatively slower vaccination rate compared with developed countries, the coronavirus resurgence in Asia, and the US Federal Reserve’s earlier-than-expected tightening of monetary policy are all risk factors that could drag down Hong Kong’s economy.
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The bank forecasts that Hong Kong’s unemployment rate could drop further to 5 percent or lower in the coming months, but that it will take some time before the rate returns to the pre-pandemic level of 3 percent or lower.
According to the latest statistics released by Census and Statistics Department on Tuesday, Hong Kong’s unemployment rate fell to 5.5 percent for the three-month period ending in June, marking the fourth consecutive decline.