Hong Kong economy likely to bounce back in second half of year, but much depends on success of Covid-19 vaccination scheme, finance chief says

Kanis Leung
·3-min read

Hong Kong’s economic activities will rebound more steadily and comprehensively in the latter half of this year if the Covid-19 vaccination scheme becomes successful, the finance chief has said.

Financial Secretary Paul Chan Mo-po on Tuesday said the local economy should grow this year, but added there were uncertainties on how strong and widespread the recovery could be.

As mainland China recorded robust economic growth and other major foreign economies regained their momentum, Chan expected Hong Kong to benefit from the export of goods.

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He said the export of services could improve too, but the pace of recovery would depend on the progress in reopening the borders. All but three of the city’s checkpoints have been closed for more than a year.

Financial Secretary Paul Chan. Photo: Nora Tam
Financial Secretary Paul Chan. Photo: Nora Tam

“Domestically, if the vaccination scheme can yield the expected results, and we see an easing pandemic, local economic activities could recover more steadily and comprehensively in the second half of this year,” he said in an online forum.

Last month, Chan predicted Hong Kong’s economy would grow between 3.5 and 5.5 per cent in 2021 over last year, after suffering a 6.1 per cent slump – the biggest year-on-year drop on record.

How Hong Kong can reboot its economy amid the devastation of coronavirus

According to the latest figures, about 379,600 residents aged 16 and above – or roughly 5.8 per cent of Hongkongers – have been vaccinated. The public has proved somewhat skittish over taking the coronavirus jabs following several deaths among the recipients – most with chronic illnesses.

On Tuesday, the finance chief expressed hopes that 2021 would be a year of recovery, but he said Hong Kong would need to pay attention to relations between China and the United States under a new American administration and emerging geopolitical scenarios.

“If Sino-US relations ease, I estimate global trade and commerce activities can further speed up,” he said.

Paul Chan expects Hong Kong to benefit from the export of goods as major economies regain their momentum. Photo: Winson Wong
Paul Chan expects Hong Kong to benefit from the export of goods as major economies regain their momentum. Photo: Winson Wong

“But the recent talks between the two countries reflect that they had accumulated quite a number of deep-rooted conflicts. It is believed that the tensions will continue.”

Last week, the first high-level talks between China and the US since President Joe Biden took office got off to a tense start in Anchorage, Alaska, putting the deeply strained relationship between the two countries on a rare public display.

Hong Kong economy suffers biggest annual contraction on record as coronavirus hammers tourism

Sparring in front of the cameras, US Secretary of State Antony Blinken told his Chinese counterpart that Washington would address its “deep concerns” over Xinjiang, Hong Kong and Taiwan. China’s top diplomat Yang Jiechi hit back, criticising the US for what he said was its struggling democracy and poor treatment of minorities, and over its foreign and trade policies.

On the online forum, meanwhile, Hong Kong General Chamber of Commerce CEO George Leung Siu-kay said the coronavirus crisis had irreversibly changed the business environment.

Leung said digitalisation would be crucial for the survival of companies as it could help them save rent and manpower costs.

Meanwhile, labour chief Law Chi-kwong said the chances of a further rise in the 17-year-high unemployment rate would be relatively low, adding much would depend on whether the health crisis was under control and the city’s measures to prevent the pandemic worked well.

Hong Kong’s jobless rate rose to 7.2 per cent between December and February, the highest since 2004.


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