Hong Kong’s recovery likely to remain moderate, gradual in H2

The strict COVID-19 measures are expected to dampen the city’s economic growth.

Hong Kong’s recovery will likely remain “moderate and gradual” in the second half of the year as tightened COVID-19 measures persist.

The city missed economic data expectations, the OCBC Treasury Research said in a report, citing, in particular, the retail sales that grew by 5.8% in June and the Purchasing Managers’ Index that slipped to 51.3 in July.

“Taken both together, it suggests that in the absence of tourist spending or solid external demand, the rebound of local consumption alone is unable to warrant any stronger economic recovery,” the report read in part.

“In other words, though the e-consumption vouchers look set to lend support to the local economy, the ongoing containment measures and the Delta variant spread across the globe could remain a drag.”

The government had launched the e-consumption voucher scheme that will distribute $5,000 to eligible residents for consumption at physical and online stores. It is expected to stimulate economic growth.

Read more: Retail sales up 5.8% in June but below expectations

The city recently relaxed restrictions on vaccinated tourists from certain places as well as suspended the Return2HK programme for visitors from China, except Guangdong province.

On top of this, the virus resurgence in China and Macau and Hong Kong’s vaccination rate also suggest that the government will not likely further reopen its borders.

“Taken all together, economic recovery may remain moderate and gradual in the second half,” the report also read.

The government recently extended some $377m worth of assistance to the tourism industry, which the OCBC said could be helpful in preventing business closures of layoffs.

Read more: Gov’t extends $377m funding for hard-hit tourism sector