Hong Kong Economy Shrinks 4.5pc In Q3

The local economy has contracted for a third consecutive quarter, shrinking 4.5 percent year-on-year in the July to September period, advance government estimates showed on Monday.

The decline widened from the 1.3 percent recorded in the second quarter and marked the worst contraction since the second quarter of 2020.

On a seasonally adjusted quarterly basis, gross domestic product fell 2.6 percent in the third quarter.

The government said weak external demand was to blame.

"The worsened external environment and continued disruptions to cross-boundary land cargo flows dealt a serious blow to Hong Kong's exports," a government spokesman said, adding that the rising interest rate environment had hurt domestic demand.

A senior economist from Natixis, Gary Ng, told RTHK that he had expected minor year-on-year growth in the third quarter.

"The reality tells us that yes indeed consumption has been quite stable, however there are two major risks that the Hong Kong economy is facing right now. The first is that there is a collapse of investment especially driven from the property sector, especially if we see that the home prices continue to fall...and of course if we look at it from the external environment, export and import had also collapsed in the past few months," said Ng.

Financial Secretary Paul Chan has warned that Hong Kong will inevitably see an annual economic contraction for 2022 and the official government GDP growth forecast for the year has been adjusted downward to a range of between -0.5 percent and 0.5 percent.

"That forecast is too optimistic because of the pressure that Hong Kong is facing right now," said Ng.

"I think it's quite hard to escape another negative growth in Q4, which basically means that in the 2022 full year, the economy can actually decline by close to three percent under the current scenario."