'Worst Is Over For Hong Kong's Economy'

An economist on Tuesday said the worst time for Hong Kong's economy is over, while warning of a challenging recovery path ahead.

Advance government estimates showed that gross domestic product grew 2.7 percent year-on-year in the first quarter of this year, bouncing back from a 4.1 percent contraction in the last three months of 2022.

The government said the improvement was led by a strong recovery in inbound tourism and domestic demand which will continue to be the major drivers for economic growth this year.

"Visitor arrivals should recover further as transportation and handling capacity continue to catch up. The improving economic situation and prospects should boost domestic demand, though tight financial conditions will remain a constraint. The continued improvement of the labour market and the disbursement of a new round of consumption vouchers will render further support to private consumption," a spokesman said.

Gary Ng, a senior economist at Natixis, told RTHK that he ruled out a contraction this year, but the economic growth might not be so plain sailing.

"For Q2, the external sectors will probably continue to be quite a big drag, in terms of the trade in goods. However, the consumption will actually continue to support the recovery," Ng said.

"In the second half of the year, I think things will get better because the gradual reopening of Hong Kong will probably turn into something that is more solid in terms of growth. And also, if we do see interest rate environment that can be lowered in the future, then it will be positive for Hong Kong's consumption and investment."

Ng also estimated economic growth of up to four percent this year.