The city’s leader announced on Tuesday that Hong Kong’s economy expanded in the first quarter of 2023, concluding a dismal year during which the financial centre was essentially shut down for business due to pandemic restrictions.
According to Chief Executive John Lee, the city’s quarterly GDP increased 2.7 percent year over year, reversing contractions in the four quarters prior, including a 4.1 percent decline in the last quarter of 2022.
At a press conference, Lee stated that “a number of sizable promotional events have increased tourism and consumption and improved the economy.”
“I believe Hong Kong’s economy in the 2nd quarter will perform better than that of the first,” the economist said, “as the mainland economy continues to swell at a fast speed and local aviation capacity speeds up its recovery.”
As it battled a wave of the highly contagious Omicron variant early last year, Hong Kong experienced one of the highest per capita Covid death rates in the world.
A series of travel and social gathering restrictions caused the city’s exports to decline and large portions of its economy to close down, which resulted in a decline in GDP for all four quarters of 2022.
Hong Kong’s finance minister released a US$97 billion budget at the start of 2023 in an effort to revive the city’s fortunes.
More than six million people received cash handouts as part of the regeneration efforts, which also included a number of tax exemptions, welfare allowances, and a fresh push to boost tourism in the area.
“Private consumption expenditure registered notable growth as sentiment improved quickly along with the removal of anti-epidemic steps in both Hong Kong and the mainland,” a government spokesperson said. “Private consumption expenditure grew by 12.5 percent year-on-year in the first quarter, compared to 1.7 percent in the preceding quarter.”
Although the numbers were better than they were in the fourth quarter of 2022, both goods import and export experienced declines of 14.5 percent and 18.7 percent, respectively.
The spokeswoman noted that exports continue to face “significant challenges” as slower development in advanced nations will reduce foreign demand.
According to IMF representatives, Hong Kong’s government finances are “still in a very strong position” on Tuesday.
According to Thomas Helbling, the government is “gradually unwinding” the fiscal support measures put in place during the pandemic. Helbling is the deputy director of the IMF’s Asia and Pacific Department.
After pro-democracy demonstrations and the start of the pandemic rocked the former British colony, Hong Kong experienced a deepening recession in 2019 and 2020.
The economy recovered by 6.4 percent in 2021 as the city’s rigorous Covid-19 regulations mostly kept it virus-free; however, those gains were later undone by the 2022 pandemic.
