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A snapshot of our economic situation

As the COVID-19 epidemic eased, the Government further relaxed the social distancing measures as planned last week, including extending the dinnertime service hours in catering premises; relaxing the limit on the maximum number of persons in a banquet; and reopening bars, karaoke, party rooms, etc.. You may also feel that general sentiment has turned vibrant, with the flow of people in restaurants and shopping malls increasing further while business is also gradually improving. Many restaurant employees also said that business was much better when I dined out. As some restaurants and shops lost staff during the epidemic, it is now more urgent for them to replenish manpower in order to cope with the rebound of business and people flow.

The unemployment rate for February - April released last week rose further by 0.4 percentage point to 5.4%, the highest since April - June last year. The total number of unemployed persons increased to over 0.2 million. Nonetheless, these figures are lagging indicators to some extent and cannot reflect the current improving situation. As I pointed out last week, we do not need to be too pessimistic about the outlook, or else we may miss the improving trend of the economy or new emerging opportunities. Taking the unemployment rate as an example, although the figures have not yet shown improvement, the employment market indeed has been gradually turning better, as felt from the sentiment in Hong Kong-style tea restaurants.

On inflation, Hong Kong’s underlying Composite Consumer Price Index rose by 1.6% year-on-year in the first quarter of this year and remained moderate overall, mainly because housing rentals which have a relatively high weighting in the index continued to fall. However, taking a closer look at the breakdown, the price increases in the three major categories, namely clothing and apparel, food items and transportation, are higher than the overall figure, and these are the areas that people face most directly in their daily lives. For example, food prices rose by 4.6% in March, out of which the rise in basic food prices even reached 7.6%. It is probably because the epidemic has caused disruptions to transportation and logistics, which in turn affected the supply of fresh vegetables and other foods. However, judging from the current trend, the rising trend of food prices is expected to moderate.

As long as the epidemic stays under control and daily life gradually returns to normal, the Hong Kong economy is expected to recover progressively in the rest of the year. The international rating agency Standard & Poor’s recently pointed out that although the fifth wave of the epidemic has seriously affected Hong Kong’s economic performance in the first quarter, it believed that Hong Kong can handle the situation well and the Government’s financial situation will not deteriorate significantly. As such, Hong Kong’s credit rating is maintained with a stable outlook.

Nonetheless, while the economy has been stabilising lately, we need to stay alert and continue to work together to control the epidemic on every front. As for vaccination, the latest arrangement is that uninfected individuals aged 18 to 59 with personal needs, or who are exposed to higher risk of infection due to working at premises such as healthcare settings, residential care homes for the elderly or residential care homes for persons with disabilities, may choose to receive a fourth dose of vaccine. May I appeal all of you to get jab in order to protect yourselves and your families.

Over the past two and a half years, the epidemic has dealt a severe blow to the economy and the society. Nonetheless, the epidemic will come to an end eventually. While making full effort in controlling the epidemic, we should also work hard to plan and promote the future development for Hong Kong. While we should not just focus on economy and neglect the importance of fighting against the virus, we should also not overlook the need of planning for the future amid the epidemic. I am looking forward to the financial summit to be held this November, which not only could strengthen our connections with the top financial leaders and institutions from overseas and the Mainland, but also make a showcase of how Hong Kong has been able to remain as a vibrant international financial and commercial centre with many opportunities despite the challenges over the past two years and more.

Looking back the past 25 years, Hong Kong has achieved a remarkable development since our return to the Motherland. Despite all the challenges we faced during the development process, from financial crises to economic fluctuations, our direction towards a stable and solid development remained unchanged. In celebrating the 25th anniversary of our returning to the Motherland, we are entering a new era and I have every confidence in Hong Kong’s future. Let us join hands together to march forward and we will definitely gain a greater achievement for Hong Kong.

May 22, 2022