The logo of the IMF is displayed at the headquarters in Washington
The International Monetary Fund (IMF) commended Hong Kong in its recent report for maintaining its financial regulation and supervision. The IMF forecasted Hong Kong’s economy to grow 3.5 percent in 2018, resulting from a cyclical upswing in the first half of the year. In 2019, it expects growth to slow to 2.9 percent.
Private consumption – aided by a tight labor market – and investments are expected to continue to support growth, with headwinds coming from the increased trade tensions, tighter global financial conditions, and slower growth in mainland China.
Over the medium-term, the economy is expected to grow at around 3 percent, close to its potential, The IMF said in a statement.
“After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising,” said Christine Lagarde, The IMF’s managing director, as she presented the new forecast at the World Economic Forum in Davos, Switzerland.
The report described how the Hong Kong SAR’s outlook has increased, taking note of the further escalation of global trade tensions, possible disorderly tightening of global financial conditions, slower-than-expected growth in mainland China, and a sharp housing market correction
Meanwhile, in another report issued earlier, the IMF recommended policy strategies in its financial sector and housing market, amongst others.
The IMF recommended the for robust regulatory and supervisory framework to continue to be strengthened to limit buildup of risks and that fintech developments should also be carefully evaluated to balance efficiency gains against potential risks.
In terms of the housing market, the IMF recommended to utilize a three-pronged strategy comprised of macroprudential measures, stamp duties, and measures to boost housing supply, which remains appropriate and should continue in place, and be adjusted as financial stability risks evolve.
“However, ultimately resolving the imbalances in the housing market requires expanding supply and further efforts are needed in this area,” the report said.
Meanwhile, the IMF reaffirmed its long-standing support for the Linked Exchange Rate System, suggesting that it should remain as an anchor of economic and financial stability for Hong Kong.
In response, the HKSAR’s financial secretary, Paul Chan, welcomed the IMF’s positive assessment and recognition of Hong Kong’s sound policies.
“With ample of buffers, strong economic fundamentals and a robust regulatory and supervisory framework, Hong Kong is well placed to navigate through the challenges ahead,” he said, as cited in the government’s official website.
He pledged that the city will continue to sharpen its competitive edge and gain opportunities from further regional economic integration, especially in the context of the Greater Bay Area development.
Reacting to the IMF findings, Norman Chan, chief executive of the Hong Kong Monetary Authority, pledged that Hong Kong will continue to push forward initiatives, such as development of the bond market, fintech and green finance, as highlighted by the IMF, to develop Hong Kong as an international financial center.
No Comments