Just the job: Hong Kong financial secretary says low unemployment can drive city's economic growth in tough times
Financial chief says stable labour market can protect city amid grim global outlook
Stability in the labour market and consistently low unemployment could emerge as the main driving force for the city's economic growth and buffer against negative external factors, Financial Secretary John Tsang Chun-wah said on Sunday.
Tsang's remarks came ahead of Monday's announcement of the city's unemployment rate - which was at 3.3 per cent in the second quarter of the year and has been steady at 3.4 per cent over the last year.
In his weekly blog, Tsang cautioned that the US dollar - to which Hong Kong's currency is linked - would remain strong, further affecting the city's trade competitiveness.
He also expressed concern at the downward trend for the tourism and retail industries, but said the fact the city had full employment would help counter the negativity.
"The stable labour market has always been the main force which backs the growth of local consumption," Tsang wrote. "If the unemployment rate could remain steady with a full employment in the labour market, the local consumption would hopefully continue to be the main force which drives Hong Kong's economic growth and buffer against the negative impact brought by the prolonged unsatisfactory external environment."
As an economic concept, full employment refers to a situation where there is enough overall demand in the economy to provide a job for everyone who wants one, rather than a zero rate of unemployment.
But economist Dr Andy Kwan Cheuk-chiu, director of the ACE Centre for Business and Economic Research, questioned Tsang's positive outlook.
"Hong Kong, as a small economy, has always been reliant on external factors as it is unable to boost the economy by its local consumption alone," said Kwan, previously of Chinese University.
"Citizens will not spend more if their income levels stay stagnant," he added.
At best, local consumption could prop up the local economy in the short time, Kwan added.
Meanwhile Tsang, who met US Federal Reserve chief Janet Yellen at a World Bank and International Monetary Fund summit in Peru last week, said a rise in US interest rates was "a matter of time" if the country's economy continued to grow. Doing so would remove a key element of uncertainty for businessman and investors, Tsang said.
