HONG KONG (Reuters) – Hong Kong’s economy lost some momentum in last year’s final quarter, in which the city was largely COVID-19-free, preliminary data showed on Friday, and an unrelenting battle to stamp out Omicron infections threatens to slow it further.
Domestic economic activity came back to life in 2021 after a prolonged recession, helped by fewer curbs on social life after many months without local coronavirus transmissions.
Hong Kong’s economy grew 4.8% in the fourth quarter from the same period a year earlier, thanks to robust export performance and improved private consumption, according to preliminary gross domestic product estimates. It expanded 5.5% in the third quarter, revised data showed.
At the start of this year, however, the re-emergence of local transmissions prompted the global financial hub to re-imposed draconian restrictions and isolate itself from the world as it mirrors China’s strategy to do whatever it takes to eliminate infections.
“Looking ahead, the Hong Kong economy is expected to expand further in 2022, but the growth pace is subject to various uncertainties, especially those relating to the local epidemic development,” a government spokesman said in a statement.
Fifteen types of venues, including gyms, bars and beauty parlours, have been ordered to shut, restaurants must close at 6 p.m, and very few passenger and cargo flights are allowed to land.
The imposition of rules stricter than at the start of the pandemic in 2020 is threatening a promising recovery.
Samuel Tse, economist at DBS Bank, said he lowered his 2022 growth forecast to 2.4% from 3.0% because of the latest curbs.
“We see some downside risks if the re-opening of the border with mainland China is further postponed to the end of the third or fourth quarter,” Tse said after the GDP data.
On a quarterly basis, the economy grew by a seasonally adjusted 0.2% in October-December, down from a revised 0.6% in the previous quarter.
For the whole of 2021, economy grew by 6.4% over a year earlier.
(Reporting by Donny Kwok and Twinnie Siu; Editing by Tomasz Janowski)
