Standard Chartered is now the latest major financial institution to lower its economic growth outlook for Hong Kong following the continued dispute between China and the United States. One of Hong Kong's three currency-issuing banks lowered its economic growth forecast for the city-state through 2021, citing headwinds from the geopolitical turmoil.
The bank lowered its growth forecasts for Hong Kong's gross domestic product (GDP) for 2019 to 2021 by a significant amount of percentage points. The bank stated that it expects the city's GDP to grow by 1.4 percent in 2019, 1.6 percent by 2020, and 2.3 percent by 2021.
This was a drastic reduction from its previous forecasts, which were 2.2 percent for 2019, 2.6 percent for 2020, and 3 percent for 2021.
According to Standard Chartered's senior economist, Kelvin Lau, the downgrade of its forecasts was based on the data gathered for the first half of the year for Hong Kong.
The economic data was apparently worse than what they had expected, drastically changing the company's outlook.
Lau explained that despite the apparent progress from the recent G20 meeting between US President Donald Trump and Chinese President Xi Jinping, the bank speculates that an amicable trade deal between both countries is still far from materializing.
The economists pointed out that as long as the punitive tariffs remain, Hong Kong and other Asian countries will still see a drop in exports and fewer trades altogether.
The drop in expectations also coincided with a bearish view on the city's property market.
A survey conducted by Citi Hong Kong revealed that 70 percent of citizens thought that it was a "terrible" time to buy a home in the city.
Like so many other Asian countries, Hong Kong has been caught in the crossfire in the year-long trade dispute between two of the world's largest economies. Hong Kong, in particular, is greatly affected seeing as that it greatly depends on its trade-relates and logistics services for its income.
Since the second quarter of 2018, economic growth in the city-state has continually declined. Hong Kong saw its output inch higher by only 0.6 percent in the first three months of last year.
Standard Chartered is not alone in its assessment of the situation. HSBC recently sounded its growth alarm, lowering its 2019 growth forecast for Hong Kong.
The city's largest currency issuer lowered its 2019 growth forecast from 2.7 percent to 2.4 percent. Wall Street banks also downgraded their outlook for Hong Kong, with JPMorgan expecting only a 2.5 percent growth for 2019 and 2020. Meanwhile, USB expects economic growth in Hong Kong to be around 2.4 percent this year and 2.6 percent in 2020.