Hong Kong’s finance chief has maintained his forecast of the city’s economic growth at between 2 and 3 per cent this year, citing a volatile external environment despite a base interest rate cut by the local monetary authority.
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Financial Secretary Paul Chan Mo-po made the statement on Thursday, soon after the Hong Kong Monetary Authority, the city’s de facto central bank, cut the base rate for the first time this year by a quarter point to 4.5 per cent.
The authority’s move matched the US Federal Reserve’s cut hours earlier to its target range of 4 per cent to 4.25 per cent, during the sixth meeting of the Federal Open Market Committee this year. The new base rate is the lowest since December 2022.
Although Hong Kong’s economy performed quite well in the first half of this year, driven by strong exports of goods and services, a robust stock market and a large influx tourists, Chan said there were still external factors that led him to resist making a stronger forecast.
“Even with the interest rate cut, there are still too many significant external variables which we cannot control, such as the development of tariffs and how far the United States’ protectionism goes,” Chan said.
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“Under such circumstances, we think that a cautious approach to maintain a GDP growth between 2 and 3 per cent will be more prudent.”