While some restrictions are due to be eased next month, Hong Kong’s battle with Covid-19 will fuel a shrinking economy and plunging house prices, according to Goldman Sachs economists.
House prices are forecast to fall around 20 per cent over the next four years, falling five per cent every year, while mortgage rates are expected to double close to four per cent in 2024, the Wall Street analysts said in a report this week.
It comes as the leader of the financial hub said it was “unarguable” that the city had undergone a “brain drain” over the course of the pandemic, which is anticipated to further bruise Hong Kong’s economy.
“These measures have certain influence on corporates and individuals, although we don’t have a figure…it’s an unarguable fact that we have a brain drain and some senior management of some corporates have left Hong Kong,” Lam told a daily news briefing on Wednesday.
“The most important thing is Hong Kong keeps its advantages. I believe after the pandemic, Hong Kong can have a better development.”
Hong Kong, which had adopted Beijing’s controversial ‘Zero-Covid’ stance, is now looking likely to transition to a “dynamic-zero” Covid-19 strategy, Lam continued.
Lam’s comments come just weeks before Hong Kong will hold an election, on 8 May, to choose who will lead the former British colony for the next five years.
It follows the leader’s fears that financial institutions in the city were “losing patience” with strict measures and grounded flights, having had its borders effectively shuttered since 2020.
A report last week founded that, due to what Lam has previously described as Hong Kong’s “isolated status”, half of European businesses in the city were considering leaving.
With firms unable to keep hold of staff, the city’s “ongoing ‘Zero-Covid’ strategy has come at a very high cost for Hong Kong’s business community,” the European Chamber of Commerce in Hong Kong said in the new paper.
The Hong Kong government has ordered businesses including gyms and cinemas to shut and restricted gatherings over the past couple of months, though some measures are set to loosened in late April if cases of the virus continue to fall.