Hong Kong’s economy is progressing, despite the global economic environment, with the city’s rate of inflation predicted to remain at a “moderate level” of 2.1%.

This is according to Financial Secretary Paul Chan Mo-po, who added that soaring inflation in the U.S. and Europe fuelled by skyrocketing energy prices, is impacting Hong Kong’s market in various ways.

Paul Chan Mo-po also said Hong Kong’s exports in July are forecast to register an annual decline due to waning demand, as well as the impact of the pandemic on cross-border traffic between Hong Kong and the mainland.

That said, Hong Kong’s economy “continues to move forward under pressure in the face of internal and external headwinds”, according to Chan, who went on to say that the Hong Kong Special Administrative Region government is making every effort to “prevent the epidemic and stabilise the economy.”

Moreover, the local unemployment rate declined by 1.1 percentage points from May to July, compared to the rate between February and April, whilst the underemployment rate fell 1.6 percentage points to a six-month low of 2.2%.

“More than two and a half years have passed since the (COVID-19) outbreak began. Thanks to more-widespread vaccinations and improved medical and quarantine facilities, as well as the principle of scientific and empiric-based and precise prevention and control, we are now in a better position to meet the needs of ‘stabilising the economy’,” Chan stated.

Furthermore, the inflation rate in Hong Kong has stayed comparatively stable during rising global inflation, Asia News reports. Housing expenditures in the city registered another decline, whilst rising food prices marginally eased from a March high.

Additionally, Chan said it is “possible that Hong Kong will raise the prime interest rate if the U.S. continues to increase its interest rate next month”, which may increase local residents’ burden on housing, but the government has “no plan or intention” to intervene in the market and “there is also not such a need to do so.”