H.K./China journey bubble very likely delayed till 2H22: Fitch

Courtesy of HK Gov

Hong Kong’s most current spherical of constraints to quit the distribute of the Omicron variant is very likely to pose a downside hazard to projections for growth in economic development of 3 p.c this 12 months and will hold off border reopening with China until eventually the 2nd 50 %, Fitch Rankings explained in a notice.

The scores agency also explained the ongoing limits on worldwide arrivals, as Hong Kong pursues a zero Covid coverage, will create “obstacles to the territory’s means to provide as a regional headquarters for international nationals, a trend which has taken form considering the fact that 2019.”

Hong Kong this 7 days banned flights from about 8 high-risk nations around the world, which includes many G7 economies, as it battles Omicron clusters. It has also shut businesses, these types of as gyms and spas and imposed a 6 pm curfew on dine in eating places. The steps are set to be in location for two months, but might be prolonged, Fitch explained.

The border reopening with China had been predicted previous thirty day period and once a vacation corridor was set up, reopening with Macau was believed to be imminent. Site visitors from Hong Kong have customarily produced up more than 15 per cent of Macau’s gross gambling earnings.

“The hold off will dampen the near-phrase outlook for cross-boundary leisure vacation and company, as nicely as Hong Kong’s retail sector. Retail has been a laggard in the labour marketplace restoration, supplied its prior reliance on mainland tourist investing. For now, we nonetheless expect the authorities to start off a cautious section-in of the corridor throughout 1H22.”

Fitch notes that the Hong Kong government has not nonetheless declared any further fiscal measures to cushion the effect of the renewed tightening of social distancing measures. “However, we feel that these keep on being a unique risk, significantly if the limits require to be extended or tightened more. Hong Kong has enough fiscal discounts to accommodate supplemental pandemic-relevant expenses, but these buffers have now observed a marked decrease considering the fact that the onset of the pandemic in 2020.”