Hong Kong’s economy rebounded to record 3.2 percent growth in 2023, benefiting from a rise in inbound tourism and private consumption but weighed down by China’s lacklustre post-pandemic recovery.
Preliminary figures released Wednesday showed the financial hub bounced back after dropping the strict Covid curbs that battered the economy, with officials eager to catch up to regional rivals.
Gross domestic product (GDP) returned to growth last year following a 3.7 percent contraction in 2022.
“Exports of services staged a strong rebound, thanks to the revival of visitor arrivals after the resumption of normal travel with (mainland China) and the rest of the world,” a government spokesperson said in a statement.
“Private consumption expenditure turned to a notable increase after the removal of anti-epidemic measures, supported by rising household income and the government’s various initiatives.”
China’s decision to reopen its borders in December 2022 spurred hopes of Hong Kong’s economic recovery, with officials initially forecasting annual GDP growth of between four and five percent.
But those estimates were later revised down, which Hong Kong finance chief Paul Chan attributed to the “slightly weaker-than-expected economic recovery”.
Hong Kong’s GDP in the third and fourth quarters rose by 4.1 and 4.3 percent on-year respectively.
Total export of goods fell 10.3 percent last year, and will continue to be pressured by “the difficult external environment” in 2024, according to the spokesperson.
“The situation may stabilise later in the year if advanced economies cut interest rates as expected,” the spokesperson added.
Hong Kong has struggled under the high interest rate environment as its currency is pegged to the greenback, with heightened borrowing costs holding back consumption and investment.
The government said more visitors arrivals are expected this year as handling capacity recovers, while private consumption will be buoyed by rising household income.
“Fixed asset investment should also grow further alongside continued economic growth, though the tight financial conditions may remain a constraint for the time being.”
Export and import of services were the biggest drivers of Hong Kong’s economic growth in 2022, increasing on-year by 21.2 and 26 percent respectively.
Private consumption expenditure increased by 7.4 percent from 2022, and government consumption dropped by 4.3 percent.
