Hong Kong financial secretary warns of economic instability and uncertainty in 2017

Financial Secretary John Tsang Chun-wah yesterday warned Hong Kong of economic instability next year, arising from financial uncertainty in the United States, China, Europe and Japan.

He told the Legislative Council’s financial affairs panel that the city’s growth will depend on domestic consumption, after a narrowing decline of retail sales, at 2.9 per cent in October, helped by better local consumer sentiment.

Strong domestic consumption should allow Hong Kong to maintain what is considered full employment at the current rate of 3.4 per cent. “Compared with the beginning of this year, when the situation was dire, things have improved; external demand has stabilised and brought some support for Asia,” Tsang said.

The city recorded 1.9 per cent economic growth for the third quarter, with a growth level of 1.4 per cent for the first nine months of the year. Tsang said this was in line with his budget projection of 1 to 2 per cent growth in 2016.

Coming after a 12 per cent rise in property prices in the first nine months of the year, the government’s latest stamp duty increase appeared to be having an impact as property transactions registered a slowdown. But Tsang warned home buyers to take heed before spending on property, as a stronger US economy could lead to interest rate hikes, making mortgage debt difficult to handle.