Hong Kong’s GDP shrinks 1.3% year-on-year in the second quarter, cuts 2022 forecasts

Government data released Friday showed Hong Kong’s economy shrank 1.3% in the second quarter from a year earlier, following weak foreign trade earnings in the period.

It was the second quarter in which the gross domestic product (GDP) of the Asian financial center contracted year on year.

Seasonally adjusted GDP increased by 1% in the second quarter compared with the previous three months.

According to analysts, rising inflation, falling global demand and weak consumer confidence in trade-dependent cities remain major risks to the recovery.

The annual growth rate for the second quarter compares with a decline of 3.9% in the previous quarter. The advance estimate for the second quarter contracted by 1.4%.

COVID-19 restrictions have been impacting the city’s economy since early 2020 and have disrupted tourism and business travel. This includes bars, restaurants and stores repeatedly closing for extended periods of time.

The government lowered its full-year growth forecast from 1% to 2% to between 0.5% and minus 0.5%, citing the deteriorating global growth outlook. At the same time, the core inflation forecast for 2022 remains at 2%.

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