Impact from cutting number of mainland tourists ‘only short term’, says think tank
Think tank director says the impact of a 20 per cent cut in individual travellers will be significant in short term, but not in long run
Cutting the number of solo travellers to Hong Kong will hinder the city's economic growth but only in the short term, according to a think tank's economic simulation.
Andy Kwan Cheuk-chiu, director of the ACE Centre for Business and Economic Research, projected that if the government reduced the number of mainland individual travellers by 20 per cent, the city's real gross domestic product "will immediately drop drastically" in the worst-case scenario.
However, the economist said the impact would be reduced over the course of two years as "tourism only contributes to a small part of the city's economy".
Kwan forecast that the expected gross domestic product for this year would drop to 1.4 per cent from 3.3 per cent if there was a 20 per cent cut in mainland tourists, but the economy would pick up gradually due to its flexibility.
He said real GDP growth in 2016 would be 3.4 per cent compared with the expected 3.7 per cent.
"The cut will only affect one particular industry, not like the financial crisis in 2009 affecting all sectors," Kwan said. "And the tourism industry is small, so small that it won't drag down the whole economy."
He estimated that such a cut would drive up the unemployment rate this year to 3.48 per cent from the forecast 3.21 per cent. In 2016, the rate would be 3.69 per cent compared to 3.2 per cent if there is no reduction.
