The Bank of East Asia expects Hong Kong's economy to shrink by about 3% this year, but next year the Hong Kong economy will recover and grow by about 3.5%.
In terms of property prices, they will fall another 5% next year, and the P interest rate may reach 6.125%.
The Bank of East Asia pointed out that Hong Kong's economic performance this year will be affected by the epidemic, the rapid tightening of the global monetary environment, the rising geopolitical situation, and the weakening of global demand. , The unemployment rate is expected to fall back to an average of 3.2%.
The bank also pointed out that although inflation in many major economies around the world remains high, cost pressures in Hong Kong are limited, and inflation in Hong Kong will remain at a moderate level of 1.9% this year and next year.
In addition, it is expected that private residential property prices in Hong Kong will fall by about 11% and 5% this year and next year, respectively.
Hong Kong's P interest rate may rise to 6.125% next year
Cai Yongxiong, chief economist of the Bank of East Asia, said that if the epidemic continues to stabilize, its negative impact will gradually fade.
However, whether the economy can fully recover still depends on the timing of customs clearance with the Mainland and changes in global economic uncertainties.
Overall, considering the gradual relaxation of anti-epidemic measures, it is believed that Hong Kong's economic performance next year will be better than this year.
In terms of interest rates, Cai Yongxiong expects that the Federal Reserve will further increase the federal funds rate in the future to suppress inflation and return to its policy goal. It is expected that there will be room for interest rate cuts in 2024.
He continued that the Federal Reserve may raise interest rates by 0.5% in December this year, and raise interest rates twice in the first quarter of next year. The federal funds rate will rise to at least about 5%, and the Hong Kong Bank will also raise interest rates by at least 0.25% in December. And with the United States to further raise interest rates, the P interest rate may reach 6.125% next year.
Mainland economy expected to grow 5.2% next year
Regarding the mainland economy, Cai Yongxiong said that even though the mainland economy has been troubled by the epidemic, the adjustment of the mainland real estate market and external uncertainties since the beginning of this year, the situation showed signs of turning optimistic at the end of the year.
He pointed out that as the authorities further optimize the epidemic prevention measures and provide support to the real estate industry, coupled with the gradual introduction of measures to promote high-quality economic development, etc., it will help boost the confidence of consumers and investors, and promote economic performance from a low level. pick up.
The Bank of East Asia predicts that the mainland's economic growth will reach 3.5% and 5.2% in 2022 and 2023, respectively, and inflation will remain moderate at 2.3% and 2.2%.