After Hong Kong imposed its latest COVID-19 travel restrictions on January 5, 2022, global market financial analyst group Fitch Ratings has warned this will likely hinder the region’s economic growth.
Since the start of the pandemic, Hong Kong has regularly placed travel restrictions and flight suspensions as a strategy to curb the virus spread to its population of 7.6 million. In its latest COVID-19 travel restriction announcement, Hong Kong has placed a travel arrival ban on eight countries ( Australia, Canada, France, India, Pakistan, the Philippines, the United Kingdom and the United States of America) from January 8 to 21, 2022.
Fitch Ratings has released an analysis stating the government’s “sudden tightening of restrictions on travel and social activity (in response to the COVID-19 Omicron variant), highlights the risks to the territory’s economy and credit metrics.”
“A further tightening of controls on international travel, announced on January 5, 2022, are likely to dampen economic growth prospects relative to our baseline assumptions, posing downside risks to our current forecast that the economy will expand by 3% in 2022,” Fitch ratings said.
Omicron Wave Poses New Risks for Hong Kong’s Economy. https://t.co/YKpbL70dss#covid #omicron pic.twitter.com/irO399jJ1c
— Fitch Ratings (@FitchRatings) January 10, 2022
The group also noted that the current restrictions will push back the territory’s plan to have a quarantine-free travel corridor with mainland China, originally expected to open in January 2022.
“We believe the tightening of restrictions on international arrivals will create further obstacles to the territory’s ability to serve as a regional headquarters for foreign multinationals, a trend which has taken shape since 2019. The latest policy moves include temporary bans on arrivals from several G7 economies,” Fitch Ratings said in its statement.
“However, it remains unclear how long the restrictions will remain in place, and the extent to which they will affect the foreign business community. Over the longer term, we believe the economic impact of any diversion of multinational business operations will be largely offset by firms from the mainland, which are likely to further increase their presence.”
International business groups are also urging Hong Kong to restart international flights as executives who traveled out of the territory for the winter holidays found that they could not return to Hong Kong because of the new restrictions that are designed to be in place for at least two weeks but may last longer, media platform VOA reported.
Hong Kong has one of the most stringent policies and restrictions when it comes to COVID-19 travel. Some of its previous measures have resulted in flag carrier Cathay Pacific suspending all long-haul cargo flights , in December 2021. The airline has also dismissed crew who have been found to violate COVID-19 protocols.
One of Hong Kong’s biggest tourist attractions, Hong Kong Disneyland, which already reported a loss of $342 million ($HK 2.66 billion) in May 2021, is now also temporarily closed for two weeks.
Assuming that the Hong Kong government continues its “zero-COVID” approach, Fitch Ratings said that risks to the territory’s growth prospects and public finances will be compounded if Hong Kong experiences further threats from subsequent waves of the Covid-19 pandemic over the next one or two years.
