Economists have slashed their growth forecasts for Hong Kong, hiking the likelihood the government could fall short of its objective for this year.

This is according to economists polled by Bloomberg, who forecast Hong Kong’s GDP will grow by 4% in 2023 compared to last year, under a previous average estimate of 4.6%.

Last month, authorities reduced their growth outlook, stating they forecast the economy will grow within a range of between 4% and 5% this year. This forecast follows a weak 2022 when Hong Kong’s GDP contracted by 3.5%, the third annual decline since 2019.

However, 10 of the 29 economists polled by Bloomberg forecast GDP may grow less than 4%, signalling Hong Kong may not meet government predictions.

“Growth this year should not be misconstrued as a robust recovery, but rather a return toward a semblance of normalcy. High global interest rates remain a feature in 2024 and will hinder the best efforts from Hong Kong as it tries to shake off its political and pandemic blues,” said Moody’s Analytics economist Heron Lim.

In addition, the economy is also facing headwinds from China’s momentum slowdown, weak global demand and the possibility for local spending habits to soften.

Furthermore, Hong Kong has struggled with retail sales this year, with tourism numbers not matching the same figures as 2019.

The value of retail sales in June fell to its lowest for any month of June since 2011 after stripping out figures from 2019-2022.

According to economists, the retail sales value is set to grow 17.3% in 2023, yet this compares to last year when the pandemic restrictions were still in place.

“While consumption will still be the biggest driver of the economy, the quarter-on-quarter growth rate will not be as pretty as before,” said Gary Ng, senior economist at Natixis SA.