Pro-democracy protests that froze sections of Hong Kong’s business and shopping districts and sluggish exports will push the city’s full-year economic growth to the lower end of the government’s forecast range.
Gross domestic product in 2014 is forecast to expand 2.2 percent, near the low end of the 2 percent to 3 percent range announced in August, the government said in a statement yesterday.
GDP growth accelerated to 1.7 percent last quarter from the previous three months, beating the median estimate for 0.9 percent growth from 14 analysts surveyed by Bloomberg News.
Hong Kong’s recovery will be tested amid slowing economic growth on the mainland, worsening business conditions and demonstrations that have blocked key roads in the city since late September.
The government yesterday flagged “heightened concern” the effects of the protests will spread from retail, catering and transport to the wider economy.
“The domestic headwinds on the protests may constrain business sentiment,” said Lu Jiang, an economist at JPMorgan Chase & Co. in Hong Kong. “On the exports side, the growth momentum is probably not going to be as strong.”
The economy expanded 2.7 percent in the third quarter from a year earlier, stronger than the expansion in April through June and beating the 2 percent rise expected by economists.
“Looking ahead, the rather encouraging developments in the third quarter may not be able to extend into the fourth quarter, in light of disruptions to economic activities due to the ‘Occupy Movement’ since late September,” the government said in the statement.
“The lack of hard data for October renders an assessment of the negative impact inflicted by the ‘Occupy Movement’ not possible at this stage.”
Business Conditions
Hong Kong’s unemployment rate was at 3.3 percent in September. Business conditions in October worsened the most in more than three years, in part because of the continuing protests, a private survey showed last week.
The Purchasing Managers’ Index for the city from HSBC Holdings Plc and Markit Economics was at 47.7 last month, down from 49.8 in September, the sharpest decline since September 2011, the bank said in a report last week.
A reading below 50 signals contraction. Police used tear gas and pepper spray in September in a failed attempt to disperse tens of thousands of demonstrators. Some parts of the city remain occupied by pro-democracy activists.
Hong Kong’s officials have warned that a prolonged standoff will harm the city’s economy. Norman Chan, head of the Hong Kong Monetary Authority, said this month that continued demonstrations may dent financial stability.
Retail sales rose for a second straight month in September, helped by the introduction of new iPhone models, Daiwa Capital Markets economist Kevin Lai wrote in a note this month.
The government warned that September’s retail sales data had yet to show the effects from the demonstrations and that downside risks to tourist spending patterns linger.
bloomberg.com
Gross domestic product in 2014 is forecast to expand 2.2 percent, near the low end of the 2 percent to 3 percent range announced in August, the government said in a statement yesterday.
GDP growth accelerated to 1.7 percent last quarter from the previous three months, beating the median estimate for 0.9 percent growth from 14 analysts surveyed by Bloomberg News.
Hong Kong’s recovery will be tested amid slowing economic growth on the mainland, worsening business conditions and demonstrations that have blocked key roads in the city since late September.
The government yesterday flagged “heightened concern” the effects of the protests will spread from retail, catering and transport to the wider economy.
“The domestic headwinds on the protests may constrain business sentiment,” said Lu Jiang, an economist at JPMorgan Chase & Co. in Hong Kong. “On the exports side, the growth momentum is probably not going to be as strong.”
The economy expanded 2.7 percent in the third quarter from a year earlier, stronger than the expansion in April through June and beating the 2 percent rise expected by economists.
“Looking ahead, the rather encouraging developments in the third quarter may not be able to extend into the fourth quarter, in light of disruptions to economic activities due to the ‘Occupy Movement’ since late September,” the government said in the statement.
“The lack of hard data for October renders an assessment of the negative impact inflicted by the ‘Occupy Movement’ not possible at this stage.”
Business Conditions
Hong Kong’s unemployment rate was at 3.3 percent in September. Business conditions in October worsened the most in more than three years, in part because of the continuing protests, a private survey showed last week.
The Purchasing Managers’ Index for the city from HSBC Holdings Plc and Markit Economics was at 47.7 last month, down from 49.8 in September, the sharpest decline since September 2011, the bank said in a report last week.
A reading below 50 signals contraction. Police used tear gas and pepper spray in September in a failed attempt to disperse tens of thousands of demonstrators. Some parts of the city remain occupied by pro-democracy activists.
Hong Kong’s officials have warned that a prolonged standoff will harm the city’s economy. Norman Chan, head of the Hong Kong Monetary Authority, said this month that continued demonstrations may dent financial stability.
Retail sales rose for a second straight month in September, helped by the introduction of new iPhone models, Daiwa Capital Markets economist Kevin Lai wrote in a note this month.
The government warned that September’s retail sales data had yet to show the effects from the demonstrations and that downside risks to tourist spending patterns linger.
bloomberg.com
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