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Hong Kong Protests Hit Local Economy

by Mary Swire, Lowtax.net
03 December, 2014

During a press briefing on December 1, Hong Kong Financial Secretary John Tsang confirmed that the city's economy is being affected by the electoral protests, despite the fact that its stock market, foreign exchange market, and financial system are, presently, still functioning normally.

He pointed out that Hong Kong's October retail sales growth showed a slowdown, but, while the business climate for small and medium-sized enterprises has also deteriorated, he stressed that the Government would take measures to help such firms, if required. He also noted that the number of tourists arriving in Hong Kong from places other than Mainland China reversed its upward trend in the third quarter of this year.

In addition, while the financial and stock markets are still operating normally, Tsang expressed his concern that prolonged protests will further undermine consumer and investor confidence and exert pressure on income growth and the employment market, which would have a knock-on effect on the economy.

"My biggest concern is really for the middle and longer term," he added. "If the occupation were to continue, no doubt our international image could be seriously damaged, which could lead to investment confidence running down."

Tsang was, therefore, not optimistic about the economic outlook in the fourth quarter of 2014. Hong Kong's economic growth forecast for this year was already downgraded to 2.2 percent last month, but, as uncertainty still remains, he did not rule out growth dropping even lower.

Finally, he also noted people are again becoming concerned about the property market, with home prices increasing ten percent in the first ten months of 2014 and property transactions up 25 percent compared with 2013. He confirmed, however, that the Government remains vigilant to the risk of a housing price bubble and would take counter measures.

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