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Hong Kong’s advance GDP estimates for fiscal year 2021 set to rebound by 6.4%. The Census and Statistics department projects a 4.8% year-on-year (YoY) increase in Q4 GDP, and a 6.4% increase for the full calendar year.
Growth was primarily driven by an uptick in private consumption, which increased 6.0% YoY in Q4 and 6.8% in Q3. A rebound in total exports from Hong Kong also recorded a 19% increase over the full year.
GDP increase this past fiscal year marks the first year of positive GDP growth since 2018. Due to the disruption from anti-government protests followed by the COVID-19 pandemic, Hong Kong’s GDP declined 1.68% and 6.08% in 2019 and 2020 respectively.
US-China trade war disruptions have also taken their toll on Hong Kong’s economy, with the value of total imports and exports having declined since 2018.
Global GDP rises along with inflation
While the global economy in 2021 has been recovering in the gradual lead up to a post-COVID world, elevated demand sparked by pandemic stimuluses and changes in monetary policy, created shortages across global supply chains.
Hong Kong, however, has escaped the issues of runaway inflation that has affected both developed economies and emerging markets. Hong Kong inflation reached only 2.4% in December, its highest point since July.
Meanwhile in the US, elevated inflationary expectations have forced the Federal Reserve to pivot towards raising interest rates. The anticipation of a high-rate environment has driven up bond yields, sparking a widespread sell-off in emerging tech stocks and other speculative assets. The Nasdaq Composite Index has sunk 11.98% since the start of the year.