Hong Kong authorities are closely monitoring rising tensions in the Middle East and the resulting volatility in global oil prices, although the immediate impact on the city’s economy remains limited, the finance chief has said.
Financial Secretary Paul Chan Mo-po also said on Sunday that, while international investor sentiment had been shaken by geopolitical instability, the city’s financial markets continued to operate in an “orderly and smooth” manner, with capital flows remaining stable and “abundant”.
Chan acknowledged that the prolonged conflict in the Middle East, unstable international geopolitics, and the sharp rise in fuel prices were weighing heavily on the global economic outlook.
“In the short term, the direct impact on Hong Kong is limited, as our economy is primarily service-driven and our goods exports to the Middle East account for a relatively low proportion [of total trade],” Chan wrote on his weekly blog.
“In the medium term, should the conflict persist, it will inevitably impact the global macroeconomy, interest rate trajectories and capital flows.”
The current volatility stems from February 28, when heightened hostilities in the Middle East – marked by joint US-Israeli strikes on Iranian infrastructure – sent global oil prices spiralling.