HKU Hong Kong GDP forecast downgraded to 2pc on back of falling external demand
HKU estimates 2pc growth in second quarter due to poor external demand, turmoil in Greece, and uncertainty on mainland and in US
The University of Hong Kong has downgraded its estimate for the city's economic growth to 2 per cent in the second quarter of this year from 2.4 per cent previously because of poor external demand and economic turmoil overseas.
The Apec studies programme of the Hong Kong Institute of Economics and Business Strategy at the university also blamed the city's possible slower growth on the long-lasting effects of a stronger US dollar, to which the Hong Kong dollar is pegged.
With the uncertainty of mainland China's slowdown, the delayed resolution of Greece's debt crisis and the uncertain timing of a much talked about rise in interest rates in the United States, Hong Kong's economy is expected to grow moderately this year, the university said.
It predicted economic growth would taper off further to 1.7 per cent in the three months to September 30, from the same period last year.
For the full year, it expected the city's real gross domestic product to grow 2 per cent - below the 2.5 per cent for last year but within the government's prediction of a 1 to 3 per cent rise.
"Stalled external demand continues to cloud Hong Kong's economic performance," said Dr Wong Ka-fu, principal lecturer of economics at the university.
Despite an increase in local consumption, growth is expected to be weighed down 1.2 percentage points by falling external demand, HKU said.
Raymond Yeung Yue-ting, senior economist at ANZ in Hong Kong, warned uncertainties caused by Greece's debt crisis might lead to continued volatility in global stock markets and dampen Hongkongers' spending in the coming months, further dragging down the local economy. "There isn't any economic boost like last year's strong sales of new mobile phones," he said.
Kelvin Lau Gin-yip, economist and strategist at the Hong Kong branch of Bank of Communications, pointed out that the Hong Kong economy had been growing steadily within the range of 1 to 3 per cent for several years.
"Despite a downward trend, Hong Kong's economy is unlikely to take a dive," he said, adding that employers were still hiring.
HKU expected the job market to stay tight in the near future, with the unemployment rate rising from 3.2 per cent last quarter to 3.3 per cent this quarter.
It said the stronger US dollar had eased inflationary pressure and predicted the rate would drop from 3 per cent to 2.8 per cent over the same period.
