ECONOMISTS cut their forecasts for Hong Kong’s economic growth, raising the possibility the government could miss its goal for the year as the post-pandemic recovery runs out of steam.

That’s according to economists surveyed by Bloomberg, who project the Asian financial hub’s gross domestic product will expand by 4 per cent this year compared to 2022, less than an earlier median estimate of 4.6 per cent.

Authorities last month narrowed their outlook for growth, saying they expect the economy to expand in a range of 4 per cent to 5 per cent in 2023. That projection is aided by a weak 2022, when GDP contracted 3.5 per cent – the third annual drop since 2019.

Even 4 per cent may be in jeopardy if the outlook worsens further. Ten of the 29 economists surveyed by Bloomberg expect GDP to expand less than that, implying the city may not meet government estimates at all.

“Growth this year should not be misconstrued as a robust recovery, but rather a return towards a semblance of normalcy,” said Heron Lim, an economist at Moody’s Analytics, who sees growth of 3.9 per cent in 2023. “High global interest rates remains a feature in 2024, and will hinder the best efforts from Hong Kong as it tries to shake off its political and pandemic blues.”

The economy is also facing challenges from China’s slowing momentum, soft global demand and the potential for local spending habits to taper off.

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The city has struggled this year to regain its appeal as a global retail haven, underscoring the damage caused by its years of pandemic isolation. Tourists aren’t coming in the same numbers as they did before protests in 2019 and pandemic restrictions in the following years.

That’s translated into weak consumer spending, with the value of retail sales in June hitting the lowest for any June since 2011, after stripping out 2019-2022 figures.

Economists see the value of retail sales growing 17.3 per cent in 2023, though that compares to a brutal 2022 when the city’s borders were heavily restricted.

“While consumption will still be the biggest driver of the economy, the quarter-on-quarter growth rate will not be as pretty as before,” said Gary Ng, senior economist at Natixis.

Other key details from the survey:

• Economists see GDP expanding 5.9 per cent y/y in 3Q and 6.5 per cent in 4Q, lower than earlier estimates of 6.7 per cent and 7.1 per cent, respectively.

• The consumer price index (CPI) is expected to increase by 2 per cent in 2023, lower than an earlier estimate of 2.4 per cent.

• CPI in 2024 is seen rising 2.1 per cent, compared to an earlier projection of 2.3 per cent. BLOOMBERG