HONG KONG – Hong Kong cut its forecast for the economy on Friday after quarterly growth fell to its lowest in nearly two years on a sharp drop in spending by Chinese tourists.
The southern Chinese financial centre’s economy expanded a “mere” 1.8 per cent in the April-June quarter over the year before, the government said. That’s down from 2.6 per cent in the first quarter and the slowest since the third quarter of 2012.
As a result, the government cut its annual growth forecast to 2-3 per cent from 3-4 per cent. It cited a “distinct slackening in tourist spending of late” and slowing domestic demand that have become “new sources of uncertainty.”
The government said there was near double-digit growth in the number of Chinese tourists during the quarter but that was not enough to offset the drop in their average spending.
The weak growth performance underscores the outsize influence of mainland Chinese visitors on the former British colony’s economy.
The city of 7 million received 41 million mainland Chinese last year or about three-quarters of its total visitors.
They’ve been known to spend lavishly on everything from baby powder to gold jewelry and luxury apartments, but the spending drop reflects how they’ve tightened their belts during the recent economic slowdown and ongoing corruption crackdown in the world’s No. 2 economy.