People walk through a shopping district in Hong Kong on December 22, 2022. ISAAC LAWRENCE AFP Hong Kong's economy is expected to see an upturn this year, mainly due to a retail boost, following the resumption of quarantine-free travel between the special administrative region and the Chinese mainland, according to Samuel Tse, DBS Bank economist.
He said that tourist spending accounted for 30 to 40 percent of Hong Kong retail sales and 80 percent of visitors came from the Chinese mainland before the epidemic. The contraction of retail sales will be reversed after normal travel resumes. He said that after DBS Bank set a full-year forecast for Hong Kong's GDP growth at 3.8 percent last week, it was echoing the resumption of quarantine-free cross-boundary travel.
The HK economy, pillar businesses are on the path to recovery.
A daily quota of 60,000 is set to be set for people to travel through seven control points between the SAR and the mainland on January 8. Travelers are not required to be quarantined, but they are required to provide a negative COVID- 19 test result within 48 hours of departure.
Financial Secretary Paul Chan Mo-po said in his Sunday blog that he is optimistic about Hong Kong's prospects and expects a resumption of normal travel to give great impetus to the city s export, tourism, retail, catering and other industries.
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Tse said that the easing of anti-pandemic measures is positive for the city's exports but the potential economic recession in the US and Europe may slow down the pace of recovery.
He said that the SAR's capital outflow is manageable, with deposits floating from the Hong Kong dollar to the US dollar amid rate hikes, while a stronger growth outlook for the country and Hong Kong will also attract capital inflow.
Tse described Hong Kong's shrinking labor force as a structural issue in the local economy, noting that the city's working population is now 175,900 less than that at the end of 2019.
He said that talent outflow is mainly seen in highly skilled sectors, such as financing, insurance and professional services.