Hong Kong economy stalls amid US-China trade dispute: finance chief

Economic growth in the semi-autonomous Chinese city for the last quarter of 2018 was less than 1.5 percent. (AFP)
Updated 17 February 2019
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Hong Kong economy stalls amid US-China trade dispute: finance chief

  • ‘The impact of China-US trade frictions on Hong Kong’s exports has clearly emerged at the end of last year’
  • Economic growth in the semi-autonomous Chinese city for the last quarter of 2018 was less than 1.5 percent

HONG KONG: Hong Kong’s economy stalled last year as the ongoing China-US trade dispute and retail woes dragged down local business, the city’s financial chief said Sunday.
Beijing and Washington have already imposed duties on more than $360 billion in two-way trade, roiling global financial markets and weighing heavily on manufacturing output in both countries.
“The impact of China-US trade frictions on Hong Kong’s exports has clearly emerged at the end of last year,” said finance secretary Paul Chan.
Economic growth in the semi-autonomous Chinese city for the last quarter of 2018 was less than 1.5 percent — the weakest since the first quarter of 2016 and a “significant slowdown” from the average growth rate of 3.7 percent in the first three quarters, Chan wrote on his official blog.
The slowdown brought last year’s growth rate to an estimated three percent, down from the higher-than-forecast 3.8 percent recorded in 2017, he added.
“It was almost ‘zero-growth’ for commodities exports in the fourth quarter, which was a sharp drop compared to the average 6 percent growth in the first three quarters,” he wrote.
Chan said consumer sentiment had also dampened with retail sales rising only 2.1 percent year-on-year in the fourth quarter, a far cry from the more than 12 percent increase in the first half of the year.
“The external political and economic situation remains unclear ... Therefore, we repeatedly stress the need to support enterprises, safeguard employment, stabilize the economy and benefit people’s livelihoods,” he wrote, hinting at the ongoing trade negotiations between the world’s top two economies.
Chan is expected to deliver the Hong Kong budget on February 27.


US economists less optimistic, see slower growth: survey

Updated 31 min 51 sec ago
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US economists less optimistic, see slower growth: survey

  • While the odds of a US recession by 2020 remain low, they are rising
  • The odds of a recession starting in 2019 is at around 20 percent, and for 2020 at 35 percent

WASHINGTON: US economists are less optimistic about the outlook and sharply lowered their growth forecasts for this year, amid slowing global growth and continued trade frictions, according to a survey published Monday.
And while the odds of a recession by 2020 remain low, they are rising, the National Association for Business Economics said in their quarterly report.
The panel of 55 economists now believe “the US economy has reached an inflection point,” said NABE President Kevin Swift.
The consensus forecast for real GDP growth was cut by three tenths from the December survey, to 2.4 percent after 2.9 percent expansion in 2018.
The economy is expected to slow further in 2020, with growth of just 2 percent, the report said.
Three-quarters of respondents cut their GDP forecasts and believe the risks of to the economy are weighted to the downside.
“A majority of panelists sees external headwinds from trade policy and slower global growth as the primary downside risks to growth,” NABE survey chair Gregory Daco said in a statement.
“Nonetheless, recession risks are still perceived to be low in the near term.”
Panelists put the odds of a recession starting in 2019 at around 20 percent, and for 2020 at 35 percent, slightly higher than in December.
Daco said that “reflects the Federal Reserve’s dovish policy U-turn in January” when the central bank said it would keep interest rates where they are for the foreseeable future, a message reinforced this week.
After four rate increases last year, Daco said a “near-majority of panelists anticipates only one more interest rate hike in this cycle compared to the three hikes forecasted in the December survey.”
Panelists see wage growth as the biggest upside risk to the economy, despite expected increase of just 3 percent this year, as inflation holds right around the Fed’s 2 percent target.
Meanwhile, amid President Donald Trump’s aggressive tariff policies, the panel projects the trade deficit will rise to a record $978 billion this year, beating last year’s record $914 billion.
In an interesting twist in the survey, only 20 percent said they expected to see the dreaded “inverted yield curve” — when the interest rate on the 10-year Treasury note falls below the 3-month bill — this year.
In fact, the yield curve inverted on Friday for the first time since 2007.