Hong Kong’s Economy up 2.7% in Q1

Hong Kong’s economy expanded by 2.7% in the first quarter of this year, ending a year-long recession. This is better than expected and is a recovery from the 4.1% contraction in Q4 of 2020. The reopening of Hong Kong’s borders boosted spending, leading to a surge in retail sales and an increase in visitor arrivals. The increase in tourism is expected to continue, driving economic growth.

According to a government report, inbound tourism and domestic demand will remain the primary drivers of economic growth this year. However, exports remain weak due to low global demand. The report also stated that the second quarter will be “much better,” signalling optimism for the economy’s future.

While the reported growth rate is slower when considering last year’s negative base effect, Hong Kong’s economy is no longer in a recession. Iris Pang, chief Greater China economist at ING Group NV, said that “the recovery lacks strength.” Despite the economic recovery, Hong Kong still faces challenges such as a shrinking population and the headwinds of slowing global growth and credit tightening overseas.

Hong Kong’s leader, John Lee, announced the figures at his weekly press conference, saying that the city is starting to recover after pandemic controls hammered the economy and led to a resident exodus. The recovery in Hong Kong’s economy is encouraging news for the city as it continues to face the challenges of the pandemic and geopolitical tensions.