Economists have downgraded their growth forecasts for Hong Kong this year amid the government’s ever-tighter virus control measures. Gross domestic product (GDP) is now predicted to contract 1% in Q1 given the speculation of a full lockdown in the city. Economists see the economy shrinking in H1 and growth weakening to just 0.2% for the full year. BofA economists said in a report that the strict rules would also deal a bigger blow to many business sectors, which have struggled against multiple headwinds since H2 of 2019. Hong Kong is also bracing for higher interest rates. The outbreak of the highly-infectious Omicron virus variant has caught officials off-guard this year and put Hong Kong’s strict Covid Zero strategy under pressure.
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