Blog

Sustaining progressive economic growth of Hong Kong

A gist of the blog:

The Hong Kong economy expanded by 3.5% the second quarter of 2018 over a year earlier. While it seems to be slower than the growth of 4.6% in the first quarter, Hong Kong’s economic fundamentals remain solid, with a low unemployment rate and wages and earning continued to improve in real terms. It is worth to noting that exports of services expanded notably by 6.1% year-on-year in real terms. In particular, inbound tourism continued to register double-digit growth. The GDP growth for 2018 should meet my forecast of 3% to 4% mentioned in the Budget this year.

Being an externally-oriented economy, Hong Kong’s economic growth will largely be affected by external factors. For the second half of the year, we should be mindful of uncertainties arising from international trade conflict and the changing US monetary policy and capital flows.

In view of the external uncertainties, it is important for us to manage the potential risks effectively and sustain the strong economic momentum. Overall, Hong Kong household debt situation has not caused problems to our financial safety. As for the banking system, it has an overall liquidity coverage ratio of around 150% and its capital adequacy ratio is over 19%, which is among the highest in the world and way above the international minimum requirement of 8%. Hong Kong’s banking system has sufficient capital and liquid assets to weather shocks.

August 12, 2018