10 Jan 2022
Hong Kong’s economic growth could be hampered by the latest Covid travel curbs that came into effect earlier this month, according to Fitch Ratings. As it stands, a travel ban has been placed on arrivals from eight countries, namely Australia, Canada, France, India, Pakistan, the Philippines, UK and U.S., until January 21, 2022.
Following the announcement, a statement by Fitch emphasised the Hong Kong government’s “sudden tightening of restrictions on travel and social activity (in response to the COVID-19 Omicron variant), highlights the risks to the territory’s economy and credit metrics.
“A further tightening of controls on international travel, announced on January 5, 2022, are likely to dampen economic growth prospects relative to our baseline assumptions, posing downside risks to our current forecast that the economy will expand by 3% in 2022,” Fitch Ratings added.
In addition, the group said the latest travel restrictions could delay plans to have a quarantine-free travel corridor with mainland China, first thought to open this month.
“We believe the tightening of restrictions on international arrivals will create further obstacles to the territory’s ability to serve as a regional headquarters for foreign multinationals, a trend which has taken shape since 2019. The latest policy moves include temporary bans on arrivals from several G7 economies,” the group said in a statement.
“However, it remains unclear how long the restrictions will remain in place, and the extent to which they will affect the foreign business community. Over the longer term, we believe the economic impact of any diversion of multinational business operations will be largely offset by firms from the mainland, which are likely to further increase their presence.”
Furthermore, international business groups are pressing Hong Kong to resume international flights. People who left Hong Kong over Christmas have been unable to return due to the new travel curbs in place.
Should the ‘zero-Covid’ stance continue, risks to Hong Kong’s growth prospects and public finances may be heightened with further Covid threats over the next couple of years, Fitch added.