Hong Kong Economy Faces Downgraded GDP Growth Forecast Amidf Challenges

Hong Kong's GDP Growth Forecast Downgraded

Hong Kong's economic growth forecast for 2024 has been downgraded to 2.5%, following a weaker-than-anticipated third quarter expansion of 1.8% year on year. The latest official data released on Friday revealed that this forecast stands at the lowest end of the government's previous range of 2.5% to 3.5%. In comparison, gross domestic product (GDP) grew 3.2% in the second quarter year-on-year, subsequent to a 2.8% expansion in the first quarter.

Retail Sales Decline Amid Tourist Influx

Despite a challenging external environment, a government spokesman expressed optimism about sustaining growth momentum for the remainder of the year. The economy grew 3.3% in 2023, rebounding from a 3.7% contraction in 2022. However, GDP shrank further by 1.1% in the third quarter, contrasting with a 0.3% quarter-on-quarter expansion in the previous quarter. Analysts suggest that weak consumption patterns result from a significant outflow of Hong Kong residents engaging in leisure travel and entertainment outside the region, counteracting the spending of inbound mainland tourists.

• The city saw 32 million visitors in the first nine months of 2024, a 39.7% increase year on year, with 80% from mainland China.
• The Tourism Board's prior estimate predicted 46 million visitors for the year, or 70% of the record 65.16 million arrivals in 2018.
• Retail sales in September decreased by 6.9% compared to the same month last year, amounting to HK$29.6 billion.

For the first nine months of the year, total retail sales are estimated to have declined by 7.6% year on year.