IMF reaffirms Hong Kong’s role as major international financial centre

The Hong Kong government has published a press statement to announce that the International Monetary Fund (IMF) has concluded its Article IV discussions and assessment of Hong Kong’s financial and economic situation. In its corresponding report, the IMF provides the following brief summary of Hong Kong’s status quo:
In 2022, Hong Kong experienced a significant economic decline due to COVID-19 outbreaks in the region and mainland China, as well as the tightening of monetary policies by the United States. However, in 2023, the real GDP is projected to grow by 3.5%. This growth is attributed to the lifting of border controls and COVID-related restrictions in Hong Kong and mainland China, resulting in increased domestic and export activities. Inflation is expected to gradually rise to about 2¼ percent by the end of 2023, while wage pressure remains moderate.
The financial system in Hong Kong is described as resilient, with local institutions holding substantial capital and liquidity buffers. The linked exchange rate system is functioning smoothly and providing stability to the economy and the financial sector. The International Monetary Fund (IMF) recognizes Hong Kong as a „major international financial center“, capable of fulfilling its role.
The IMF also acknowledges the decline in housing prices, which decreased by approximately 16% by the end of 2022 from their peak in September 2021. However, housing prices are now starting to rebound. The growth outlook for Hong Kong is currently balanced, with manageable systemic risks in the financial sector due to the buffers held by institutions.
Despite these positive developments, there are potential factors that could hinder the recovery. A more severe global economic slowdown, regional conflicts, and subsequent trade disruptions could impede progress. Additionally, if there is a sharp increase in global risk premiums due to renewed stress in the global banking system or tighter monetary policies in major advanced economies, Hong Kong could experience adverse effects.