IMF Hong Kong Report

Sources: CEIC Data Company Ltd.; HKMA; Haver Analytics; and IMF staff calculations.


Overview. Growth has been steady, albeit slightly below potential, and the unemployment rate is

low. Nevertheless, the economy faces multiple challenges related to the Fed liftoff, structural change

in Mainland China, and the domestic property sector.

Policies. Addressing these challenges and securing healthy growth into the medium term require

- proactive use of the fiscal space to cushion the economy against near-term shocks;

- maintaining the Linked Exchange Rate System (LERS), an anchor of expectations and cornerstone

of stability for over three decades;

- implementing the 2014 Long-Term Housing Strategy effectively to ensure targets are met and

public expectations about supply and affordability improve in a durable manner;

- adjusting the property-related macroprudential measures based on evolving financial stability

risks and not in response to aggregate demand developments (unless the measures are deemed

to impair credit intermediation and disrupt the banking system’s ability to support the real

economy); and

- further fortifying the defenses of the financial system by enacting a comprehensive recovery and

resolution framework; continuing to strengthen the oversight regime for securities markets; and

implementing a risk-based capital regime for insurance companies.

Published: January 2016

By: International Monetary Fund

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