IMF's Positive Assessment

The International Monetary Fund (IMF) has released a positive assessment regarding Hong Kong's economic trajectory, projecting a real Gross Domestic Product (GDP) growth of 2.7% for both 2024 and 2025. This analysis follows an IMF mission's visit to the city from November 11 to 22 last year.

Hong Kong's Financial Resilience

In its report unveiled last week, the IMF affirmed Hong Kong's resilience as a leading international financial hub. The financial system remains robust, bolstered by strong institutional frameworks, an ample policy buffer, and the effective operation of the Linked Exchange Rate System (LERS). This endorsement comes at a critical time, as the region grapples with a fiscal deficit that has reached HK$143.2 billion over the initial eight months of the fiscal year.

Fiscal Deficit and Future Outlook

The IMF anticipates a gradual reduction in the fiscal deficit, supported by new revenue measures and tightened expenditure controls, alongside a decrease in pandemic-related spending. Financial Secretary Paul Chan Mo-po further revised the estimated budget deficit for the current year to below HK$100 billion (approximately $12.8 billion), a stark increase from the prior forecast of HK$48.1 billion made in February.

Government Commitments and Strategic Initiatives

The IMF commended the HKSAR government's commitment to medium-term fiscal consolidation and its strategic initiatives, such as promoting the Guangdong-Hong Kong-Macao Greater Bay Area project, which aims to attract investments, foreign talent, and businesses specializing in high-value industries. Furthermore, the decision to eliminate demand-side management measures for residential properties was deemed appropriate by the IMF.

Government Officials' Confidence

In response to these findings, Chan expressed confidence in Hong Kong's financial future, stating, 'We will continue to reinforce and enhance Hong Kong's position as an international financial center, fully playing our unique role in connecting the mainland and the world through the 'one country, two systems' framework.'

Importance of Financial Stability

Echoing these sentiments, Eddie Yue, Chief Executive of the Hong Kong Monetary Authority, emphasized the importance of maintaining vigilance to ensure financial stability while fortifying the city’s status as a global financial center.

Upcoming Discussions and Monitoring

The discussions held during the IMF's visit included not only government officials but also financial regulators and representatives from the private sector. The details from the full report will be deliberated by the IMF Executive Board in January, with many stakeholders keenly watching for further insights on Hong Kong’s recovery narrative.

Conclusion

Keep an eye on this developing story as Hong Kong sets its sights on solidifying its reputation as a premier financial destination in the coming years.