Financial news
Written by: Huang Jie
2020-01-23 10:40
Last updated: 2020-01-23 10:40UBS released the Hong Kong Economic Report, which cut its forecast for Hong Kong's economy this year, from an increase of 1.2% to a contraction of 0.5%, which is lower than the average increase of 0.2% calculated by Bloomberg.
At the same time, the bank also lowered its forecast for Hong Kong last year, worsening from a 1.1% contraction to a 1.3% contraction. UBS also warned that if Wuhan pneumonia caused a SARS epidemic in Hong Kong, Hong Kong's GDP would shrink by 6.6% in the first quarter.
Hong Kong's economic upturn is weaker than expected
UBS Greater China and North Asia economic analyst Deng Weishen pointed out that the Hong Kong economy has shown signs of improvement recently, but the intensity is less than the bank ’s expectations. For example, the hotel occupancy rate is still worse than last year ’s full situation, and the catering industry expects annual revenue during the Spring Festival Shrink 20%.
He went on to point out that the escalation of social events has a greater impact on the real economy than expected, and the lagging impact will be more lasting. The unemployment rate is accelerating and the latest rise to a recent high of 3.3%, putting downward pressure on income and consumption growth.
UBS said that assuming the epidemic is maintaining its current outbreak, it could also put downward pressure on normal business activities. (Photo by Ou Jiale)
If the outbreak worsens, the economy will shrink sharply
The pneumonia epidemic in Wuhan in the mainland continues to ferment. Deng Weishen said that it has increased the uncertainty of the Hong Kong economy. Assuming that the current outbreak is maintained, it may also exert downward pressure on normal business activities, especially tourism and business meetings. The bank emphasized that the current economic forecast assumes that the pneumonia epidemic in Wuhan has not deteriorated. If the situation escalates, it is believed that it will bring uncertainty to the real economy.
Deng Weishen made it clear that in view of the already fragile growth of Hong Kong and the increased reliance on tourism as compared to SARS, if Hong Kong's economy suffers from a "SARS" epidemic, it is expected that the measured GDP in the first quarter will contract year-on-year 6.6%. UBS quoted that when SARS broke out in 2003, Hong Kong's GDP contracted in the second quarter of the same year, and the number of visitors to Hong Kong plummeted by 70%.
UBS believes that the impact of the epidemic on the economy is only temporary, as it has rebounded sharply after SARS. ﹙Profile picture﹚
But the impact is temporary
However, UBS believes that the impact of the epidemic on the economy is only temporary, just as Hong Kong's economy has rebounded sharply after SARS. Faced with ongoing challenges, the bank expects that in fiscal years 2020-2021, the government will announce more countercyclical measures to focus on improving social welfare, supporting businesses and employment, and promoting Hong Kong's long-term growth.
UBS maintains its forecast for Hong Kong's economic growth of 2.9% next year.
Wuhan pneumonia SARS Hong Kong economy