Rating agency Fitch has cut its growth forecast for Hong Kong in half, citing the growing Omicron outbreak and the government’s decision to further tighten measures in the city.
Fitch Ratings has revised its 2022 GDP growth forecast for Hong Kong from 1.5 percent to 3 percent, according to a note, implying that real GDP will not surpass its 2018 level – prior to the anti-government protests and pandemic – until 2023.
According to Fitch, this would rank Hong Kong amongst the weakest recent growth performances across all sovereigns and territories rated by the firm at 110 out of 120.
«At the time of our prior projections in early December 2021, we assumed that the low local infections at the time would soon pave the way for a quarantine-free travel bubble between Hong Kong and mainland China, which would generate positive spill-overs for the territory’s tourism and leisure sectors,» Fitch said. «Many of these assumptions are no longer viable in light of recent developments, at least over the near term.»
«Dynamic Zero Infection»
The revised forecast assumes that Hong Kong will maintain its strict Covid regime – newly termed the «dynamic zero infection» approach – until 2023, in line with mainland China.
«Even after the current outbreak subsides, this approach will likely require the authorities to sporadically tighten and loosen restrictions on public gatherings and entertainment venues in response to infection levels, with associated disruptions to consumption and services,» Fitch said.
«Previous rounds of social distancing have typically been extended well past their initial expiry dates, and relaxed only gradually.»
