GGRAsia – Fitch still expects HK-mainland travel easing within 1H22

Fitch still expects HK-mainland travel easing within 1H22

Jan 07, 2022 Newsdesk Latest News, Macau, Top of the deck

Fitch Ratings Inc says the restrictions on travel and social activity imposed in Hong Kong as a countermeasure against an outbreak there of the Omicron variant of Covid-19, “will dampen the near-term outlook for cross-boundary leisure travel and business”. The institution stated in a Friday note that it had previously expected a quarantine-free travel corridor between Hong Kong and the mainland “to commence this month”.

Hong Kong’s Chief Executive, Carrie Lam Cheng Yuet-ngor, said earlier this week that the recent growing number of Covid-19 infections had in likelihood set back the chances of that city having a quarantine-free travel arrangement with mainland China.

“For now, we still expect the authorities to begin a cautious phase-in … during first-half 2022” of the quarantine-free travel scheme between Hong Kong (pictured) and mainland China, said the ratings agency.

The Macau authorities have said that Macau and Hong Kong might be able to launch a quarantine-free travel scheme once Hong Kong and the mainland had reached a similar arrangement.

Macau announced this week a 14-day ban on air travel from outside China to Macau, starting from Sunday (January 9) until January 23. The local authorities have not ruled out the possibility of extending that ban.

Fitch said in its Friday memo that the Hong Kong government’s “sudden tightening of restrictions on travel and social activity … highlights the risks to the territory’s economy and credit metrics that further waves of the virus may pose if the authorities seek to adhere strictly to a so-called ‘zero Covid’ approach.”

On Wednesday, the Hong Kong authorities imposed strict new virus controls, including banning restaurant dining-in after 6pm, closing all bars, beauty parlours, and beaches, and halting passenger flights from eight countries. The rules have been instituted for two weeks, but may be extended.

Fitch said the fresh measures “are likely to dampen economic growth prospects” for Hong Kong, posing “downside risks” to the institution’s forecast that the city’s economy will expand by 3 percent in 2022.

The ratings agency said in a December report that it expected a “slow recovery” in international tourism across Asia Pacific during 2022, despite progress made in Covid-19 vaccination coverage and “stepped-up reopening efforts”.