FS cautiously optimistic in H2 despite global risks

Financial Secretary Paul Chan has expressed cautious optimism about Hong Kong’s economic outlook for the second half of the year, despite potential risks arising from shifting global political dynamics. In an interview on a local radio program, Chan highlighted that the economy performed well in the first half, bolstered by strong export activity and stable demand from both abroad and within the city.

He pointed to encouraging signs like 14 consecutive months of retail sales growth and a modest rise in the catering sector. Financial markets have also demonstrated signs of stabilisation, with the property and stock markets showing positive trends. Chan also noted that the labor market remains robust. While acknowledging external challenges like US trade policies and interest rate fluctuations, Chan does not expect any dramatic changes in the near term.

The market is currently anticipating no significant interest rate changes for the rest of the year, with only a possible 0.25 percent increase already priced in. Chan also emphasized how US companies have become more adaptable in recent years, with Hong Kong’s exports now ranking fourth globally, though still significant. The US remains a crucial trading partner, though its relative importance has waned compared to Southeast Asia and other regions.

Chan stressed the importance of managing geopolitical risks, including the Middle East conflict and potential supply chain disruptions, but remained confident that Hong Kong can navigate these uncertainties with resolve and continued efforts to foster stability and growth.