Fitch Ratings predicts 4% rebound in Hong Kong economy

Fitch Ratings said the economic recovery is expected to continue into next year.

Hong Kong.- Hong Kong’s economy is expected to rebound by 4 per cent this year, according to Fitch Ratings. The agency has affirmed Hong Kong’s ‘AA-‘ rating with a stable outlook, despite challenges such as a high budget deficit and the loss of foreign multinationals that had used Hong Kong as a hub in the past.

Analysts predicted that the economic recovery will extend into next year, estimating a 3.5 per cent GDP growth in 2024. While the budget deficit remains high, it is estimated that it will narrow gradually from 7.3 per cent of GDP in 2022 to about 3.7 per cent this year. The SAR has fiscal reserves of almost 30 per cent of GDP.

Analysts noted that “the general government debt of 53 per cent of GDP largely comprises exchange fund instruments used to manage Hong Kong’s linked exchange-rate mechanism with the US dollar”. This has been controversial as Hong Kong has struggled to keep pace with the dollar’s recent surge, leading to calls for the currencies to be de-pegged to avoid a deflationary Hong Kong dollar.

They also noted that “strict border controls and pandemic measures, which have persisted long after most of their peers, combined with governance changes since 2019, have damaged the city’s reputation as a world-leading business Center one’s image.”

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