Hong Kong’s hottest spherical of restrictions to end the spread of the Omicron variant is very likely to pose a draw back danger to projections for expansion in financial progress of 3 percent this year and will delay border reopening with China until eventually the next half, Fitch Rankings explained in a take note.
The rankings company also stated the ongoing constraints on intercontinental arrivals, as Hong Kong pursues a zero Covid plan, will build “obstacles to the territory’s means to provide as a regional headquarters for foreign nationals, a pattern which has taken form since 2019.”
Hong Kong this 7 days banned flights from about 15 substantial-chance countries, which include a number of G7 economies, as it battles Omicron clusters. It has also shut enterprises, these types of as gyms and spas and imposed a 6 pm curfew on dine in dining places. The measures are set to be in spot for two months, but may be extended, Fitch said.
The border reopening with China experienced been envisioned previous thirty day period and once a journey corridor was recognized, reopening with Macau was assumed to be imminent. Visitors from Hong Kong have ordinarily created up a lot more than 15 percent of Macau’s gross gambling earnings.
“The delay will dampen the near-time period outlook for cross-boundary leisure vacation and organization, as perfectly as Hong Kong’s retail sector. Retail has been a laggard in the labour current market recovery, given its prior reliance on mainland tourist spending. For now, we continue to expect the authorities to start a careful period-in of the corridor all through 1H22.”
Fitch notes that the Hong Kong government has not however declared any added fiscal measures to cushion the influence of the renewed tightening of social distancing steps. “However, we think that these remain a unique possibility, especially if the constraints require to be extended or tightened additional. Hong Kong has ample fiscal price savings to accommodate extra pandemic-linked expenses, but these buffers have by now observed a marked drop since the onset of the pandemic in 2020.”