News analysis

Hong Kong may be hit by perfect storm

US-China trade spat, strong currency, rising interest rates could hurt more than expected

The Hong Kong Monetary Authority warned last month that interest rates would rise as the US Federal Reserve moves to hike rates. This would make borrowing expensive and could cool the city's overheated property sector.
The Hong Kong Monetary Authority warned last month that interest rates would rise as the US Federal Reserve moves to hike rates. This would make borrowing expensive and could cool the city's overheated property sector.PHOTO: AGENCE FRANCE-PRESSE

A perfect storm of rising interest rates, a strong currency and trade war blues could be circling Hong Kong, and preparations for the worst are in order so the city can ride out the choppy waters.

To set the context, Hong Kong's economy has had a strong showing - its economy outperformed forecasts to grow 3.8 per cent year-on-year in 2017. The growth was just 1.9 per cent in 2016.

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A version of this article appeared in the print edition of The Straits Times on July 31, 2018, with the headline 'Hong Kong may be hit by perfect storm '. Subscribe