Letters | Moody’s vs Hong Kong officials: who’s right about the economy?

Readers discuss Moody’s downgrade of Hong Kong’s credit outlook, giving RCEP more attention, and one easy way to make taxis more competitive

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Pedestrians pass a backdrop of the city skyline on a street in Hong Kong’s Central district on November 20. While the economic realities in Hong Kong are multifaceted, narratives about them have the power to shape economic outcomes. Photo: Bloomberg

Published: 11:30am, 18 Dec 2023

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The economic narrative of Hong Kong unfolds in a dialectic between caution and confidence: Moody’s articulates a restrained view, while the Hong Kong government offers a more optimistic projection (“Hong Kong No 2 official slams Moody’s ‘smearing’ credit outlook downgrade”, December 7).

Whichever perspective one leans towards, it is widely recognised that understanding economic trends is complex – and even the most astute economists can misjudge, as history reminds us with Irving Fisher’s ill-timed assertion of a “permanently high plateau” for the stock market, made just days before the market crash of 1929.

Experts have developed numerous metrics aimed at distilling the complexities of economic performance into quantifiable terms. For the lay observer, straightforward metrics such as the unemployment rate are a starting point, yet Hong Kong’s enviable low rate does not fully disclose deeper issues such as labour shortages and the “lying flat” social trend, where individuals opt out of the competitive workforce.

Moreover, fluctuations in the Hang Seng Index, which remains notably adrift from its peak in January 2018, signal investor sentiment but do not always mirror the state of local businesses.

Observations from high street also warrant a judicious appraisal. An increase in vacant shopfronts in Causeway Bay and Tsim Sha Tsui could be interpreted as a sign of immediate economic malaise, yet it may also be attributable to the inherently sluggish nature of rental adjustments, which often lag behind the economic cycle.