Inflation May Hasten Hong Kong's Recession Risk

Hong Kong's consumer price index rose 7.9 percent from a year earlier after a 5.6 percent increase in June, the fastest surge since 1995.

 

Quoting Morgan Stanley and Daiwa Capital Markets, Bloomberg reports that Hong Kong’s economy will shrink again this quarter after a contraction in the three months through June that was caused by a slowdown in exports.

 

“The headline CPI figure is pretty scary, and that will change inflation expectations among residents in a drastic way,” says Kevin Lai, of Daiwa. “The higher business costs and rising expectations for wage gains may force some companies to close and hasten the recession.”

 

 

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