Paul Chan: HK's jobless rate will rise further

Financial Secretary Paul Chan on Sunday (May 15) said the latest unemployment rate to be released this week is expected to rise further. Still, he also said there is reason to be optimistic about the city’s economy.

Hong Kong's jobless rate for the three-month ending March climbed to five percent, the highest in nine months.

Writing on his blog, Chan said the upcoming figure will reflect the employment situation during the peak of the city's Omicron wave.

But he said with the epidemic situation coming under control and the government easing social distancing measures in phases, and he believes the jobless rate would gradually improve as long as the virus situation remains stable.

On Friday, the government cut its GDP growth forecast for this year to one to two percent, as it warned that the local economy will continue to be bogged down by the external environment.

The latest projection was down from the two to 3.5 percent expansion that Chan announced in February.

The finance minister said the pandemic had seriously affected the city’s economic performance in the first several months of this year, adding he expects April’s economic figures to be relatively weak.

He also said that ongoing China-US tensions, strained geopolitical situations, rising inflation, and interest rate hikes have affected the economic outlook for the SAR and the rest of the world.

But Chan said people should not be “too pessimistic.”

“Although we cannot control changes in the external environment, pressure and challenges would only make our economy more agile and resilient if we get our risk management and work done,” he said.

Meanwhile, Chan said while there have been some capital outflows due to rising interest rates in the United States, there is abundant liquidity in the local banking system.

He stressed that with sufficient reserves in the Exchange Fund, the SAR can defend the Hong Kong dollar’s peg to the greenback.