News Tech: The city’s finance chief warned on Thursday that Hong Kong is likely to conclude the year in the throes of a severe recession as spiralling interest rates and stringent Covid-19 regulations continue to hurt the economy.
Because the Chinese city’s currency is tied to the US dollar and serves as one of the pillars of its status as a business hub, its monetary policy follows that of the Federal Reserve.
Financial Secretary Paul Chan told reporters that there was a “very strong likelihood” that Hong Kong will see negative GDP growth this year and that interest rates were being raised “at a speed that was never seen in the preceding three decades.”
The Fed’s hardline rate increases, intended to rein in skyrocketing inflation, come at a particularly challenging time for Hong Kong and weaken optimism at a time when the economy is already having trouble.
Chan expressed support for facilitating business and travel.
People are more cautious in an atmosphere with high interest rates, so the pandemic-related factors need to keep getting better if we want to see more investments, he said. Business executives have long said that the economic limits, together with Beijing’s persistent repression of dissent, have made it more difficult to recruit top personnel and isolated Hong Kong from the rest of the world, particularly when competitors reopen.
Over 200,000 people have left the city net in the last two years, a record population decline. “Other Asian cities should not be ahead of Hong Kong. However, there is now a sense that we are lagging behind and are being abandoned, “According to Eden Woon, the newly appointed director of the city’s American Chamber of Commerce,
“People are departing, and it’s difficult to keep talent. All of these issues need to be resolved since they accumulate “Added he. A senior Chinese official, meanwhile, stated earlier this week that it was “inappropriate” to claim that the city was experiencing an exodus.
In the past two years, the Hang Seng Index has had one of the worst performances among the leading bourses, losing more than 22 percent since the beginning of January after losing 14 percent the year before. While large banks like Standard Chartered and HSBC had defied that pressure, the Hong Kong Monetary Authority was forced to follow the Fed.
The Hong Kong stock market was negatively impacted by the Fed’s rate hikes, dropping as much as 2.6 percent on Thursday to reach 17,965.33, its lowest level since December 2011. Huang Liuquan, deputy director of the Hong Kong and Macau Affairs Office, stated on Tuesday that there is no way to establish that the population decline in Hong Kong is due to a wave of emigration.