Protests in Hong Kong could hurt the city’s economy – as well as China’s – but the impact will depend on how long the “uncertainty” lasts, the World Bank’s chief Asia economist says.
Sudhir Shetty said the Bank was closely monitoring the events in Hong Kong, where thousands of pro-democracy protesters have paralysed major streets for more than a week, leading to a tense standoff with the government.
“Obviously we, like every other set of economic analysts, are looking very closely at the situation and following it and looking at its impact,” he told reporters in Singapore on Monday.
“The impacts will be both on the Hong Kong Special Administrative Region itself, their economy, but also in terms of the broader impact on the Chinese economy,” he added.
“As of now, what we anticipate is obviously a greater impact on Hong Kong SAR – so slower growth in 2014 than was being anticipated earlier.”
Shetty added that “at this stage, our best estimates … are that there isn’t as yet significant spillover to the broader Chinese economy, but it is still something that we and others will continue to watch”.
The Bank does not have a forecast for Hong Kong’s economic growth because it covers only developing economies.
But it forecast Chinese growth to ease to 7.4 per cent this year and 7.2 per cent in 2015 from 7.7 per cent last year.
Shetty said Hong Kong is a “high-income” economy comparable to Taiwan.
“The only point I would make is that both the short-term impacts on growth as well as the more medium-term impact on its role as a financial centre will depend obviously very much on how the current uncertainty plays out,” he said.
“Other things being equal, uncertainty is not a good thing for economic activity.”
Hong Kong civil servants returned to work at the government’s headquarters on Monday as the protests – which saw tens of thousands hit the streets last week – subsided in the face of a deadline to disperse.
But although numbers dwindled dramatically at the main protest sites, many said they would return later in the day to resume their campaign for free elections.