Editorial | Recession-hit Hong Kong knows it just has to open up
- As city’s economy is dragged back again and external factors take their toll, a return to quarantine-free travel becomes even more urgent
Hong Kong’s economy has shrunk in two consecutive quarters year on year, meeting the technical definition of a recession for the second time since it reeled from the initial shock of the Covid-19 pandemic in 2020. This time, the lingering fifth wave of the pandemic has helped drag it backwards again.
But what sets this apart is an even more uncertain global outlook. This includes rising inflation in advanced economies amid supply-chain disruption by the Ukraine war, and the threat to global growth of rising interest rates.
The latter cannot be overstated. With the city’s borrowing rate now equal to an 11-year high in 2019 and more rises expected through 2023, the path to economic recovery will be uphill.
The impact on Hong Kong’s externally oriented economy is amplified by a fall in exports of 8.6 per cent in the second quarter year on year, which contributed to a 1.4 per cent contraction in gross domestic product in the period. Financial Secretary Paul Chan Mo-po has said geopolitical factors are unpredictable but Hong Kong has to prepare for a worst-case scenario.
One example of the uncertainties is that hundreds of mainland firms face delisting by securities authorities in the US over conflicting auditing standards.
