Transcript of remarks by FS at media session (with video)

     Following is the transcript of remarks by the Financial Secretary, Mr Paul Chan, on the United States Federal Reserve Board rate hike this morning (September 22):
Reporter: Secretary, so with the US (United States) Federal Reserve signalling more economic pain, more aggressive hikes, what risks do you see for Hong Kong, economically, for the housing market and what tools do you have to mitigate these risks, especially given that you are predicting a budget deficit of over $100 billion? Thanks.
Financial Secretary: The US has increased interest rate by 0.75 per cent. Together with the earlier increases so far this year, they have increased their interest rate by 3 per cent. And given the heightened inflation rate, they have expressed the likelihood of continuing to increase interest rate in the remainder of this year.
     So, the external environment under this high interest rate situation is that the economic growth in the US will be slowing down. Say for example, in June I think they forecast a GDP (gross domestic product) growth of about 1.7 per cent for this year. Now they have lowered it to about 0.2 per cent. There is a similar situation in Europe and the UK (United Kingdom). External demand will suffer because of the high interest rate. Consequently, our export will suffer. In fact, in the second quarter, exports of Hong Kong dropped by more than 8 per cent. So, we have to be very careful. One of the key drivers of our economic growth, that is export, will be affected.
     Domestically, in terms of consumption, given the stabilising COVID situation, and hoping that travelling between Hong Kong and the rest of the world would become easier, and with the help of consumption vouchers, private consumption in the remainder of this year is comparatively optimistic.
     You asked about the property and housing market. Prices of residential housing dropped by about 6 per cent in the first eight months this year. Given the heightened interest rate, the sentiment of the property market has obviously been affected and will continue to be so. But as you know, housing market depends on a number of factors. Interest rate is of course one, but we also have to look at the demand and supply, employment, repayment capability of homeowners, financial position of developers and individual households, etc. So taking all these into account, I don't think there would be a risk of sharp adjustment in the property market. But obviously, given the dampened sentiment, you can tell from the recent figures that the transaction volume has come down, and prices been adjusted a little. We will continue to monitor the situation, but we don't believe there will be a risk to the financial system. Thank you.
(Please also refer to the Chinese portion of the transcript.)

Ends/Thursday, September 22, 2022
Issued at HKT 19:20