For the second time in three months, the government lowered its forecast for Hong Kong's economic growth for the whole of this year.
The government expects the local economy to contract by 0.5% this year to a growth of 0.5%.
The government pointed out that in view of the weaker-than-expected economic performance in the first half of the year and the sharp deterioration in the global economic outlook, the real GDP growth forecast for this year has been revised down from 1% to 2% reviewed in May to a contraction of 0.5% to growth. 0.5%.
The government will continue to monitor the situation closely.
Quarter-on-quarter growth returned to positive growth of 1%
The government pointed out that the overall improvement in Hong Kong's economy in the second quarter was weaker than expected.
Weaker global demand and continued disruptions to cross-border shipments weighed heavily on export performance.
Meanwhile, local activity recovered slightly, but momentum softened late in the quarter.
The decline in real GDP slowed to 1.3% in the second quarter after contracting by 3.9% year-on-year in the first quarter.
On a seasonally adjusted quarter-to-quarter basis, real GDP rose by 1%.
In terms of import and export data, the year-on-year decline in overall merchandise exports widened to 8.6% in real terms in the second quarter.
Exports to the Mainland fell further markedly, with growth in exports to the US and the EU slowing, while exports to most other major Asian markets continued to rise.
Exports of services recovered to a modest real growth of 2.3%.
The output of tourism services has grown significantly, but remains at a very low level.
There was a slight recovery in cross-border financial activity, and the export of financial services improved accordingly.
The government also pointed out that the labor market improved in the second quarter.
The seasonally adjusted unemployment rate fell to 4.7% in the second quarter after rising from 5.0% in the first quarter to 5.4% in February-April.
Unemployment rates in most major industries fell in the second quarter from their February-April highs, notably food service activities, retail, construction, and arts, entertainment and recreational activities.
The underemployment rate rose from 3.1% in the first quarter to 3.8% in the February-April period, before falling back to 3% in the second quarter.
Adjustment of entry quarantine arrangements with service output
Looking ahead, a marked deterioration in the external environment will seriously affect Hong Kong's export performance for the rest of the year.
High inflation in advanced economies and the consequent sharp monetary tightening by several major central banks will further dampen global growth momentum, although a recovery in the mainland economy is expected to offset some of the impact.
Risk factors such as the evolution of the global epidemic and the tense geopolitical situation should be closely monitored.
However, if the cross-border logistics interference between the mainland and Hong Kong is significantly improved, Hong Kong's foreign trade may be relieved to some extent.
The recent adjustments to quarantine and testing arrangements for inbound passengers should also help service exports.
Locally, economic activity should resume further as long as the local epidemic remains under control.
The voucher program will continue to support consumer demand, but tightening financial conditions may weaken consumer sentiment and consumer spending.
Rising borrowing costs could also make companies more cautious about investing in fixed assets.
All sectors of the community must continue to work together with the government to keep the local epidemic under control.
Before the government lowered its economic growth forecast for this year, major banks and chambers of commerce had already taken a dim view of Hong Kong's economic prospects.
Daiwa has lowered its forecast for the local economy this year, from a contraction of 0.5% to a contraction of 1.7%. Both Fitch and the General Chamber of Commerce expect the economy to contract by 0.5% this year.
