Hong Kong Could Face A Perfect Storm, Warns IMF

The International Monetary Fund (IMF) warned on Friday that short-term risks to Hong Kong's economy have increased "significantly" with a combination of the trade spat between China and the US, rate rises by the Fed, and a housing market correction all coming together.

"These shocks are likely correlated and could materialise together, which would amplify their effects," the global body said in its latest report on the city.

But the IMF said years of efficient macroeconomic management has given the SAR enough of a buffer to weather these shocks.

The body is projecting Hong Kong's GDP growth to slow to 2.9 percent this year, down from its estimate of a 3.5-percent expansion for 2018.

On the housing market, the IMF said home prices remain “overvalued” and their affordability has worsened.

It said more needs to be done to boost supply, adding that the property cooling measures currently in place are appropriate.

Responding to the report, Financial Secretary Paul Chan said in a statement that he welcomed the IMF’s positive assessment and recognition of Hong Kong’s sound policies.

He said Hong Kong is able to navigate it was through the challenges ahead with ample buffers, strong economic fundamentals and a robust regulatory and supervisory framework.

The head of the Monetary Authority, Norman Chan, said he agreed with the IMF that macro-prudential measures have helped contain systemic risks and that they should remain in place for now.