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Hong Kong economy cools as trade tension mounts

Hong Kong’s economic growth slowed in the latest quarter and the government warned it could face headwinds from U.S.-Chinese trade tension and higher interest rates.

Government data Friday showed the Chinese territory’s economy expanded by 2.9 per cent over a year earlier, down from the previous quarter’s 3.5 per cent.

Exports rose 5 per cent over a year earlier, but the government said the impact of trade tension and weaker global demand “has begun to surface” and is “likely to become more apparent in the near-term.”

The government said Hong Kong also faces a drag from higher interest rates. The Hong Kong dollar has a fixed exchange rate with the U.S. dollar, which requires the central bank to raise interest rates along with the U.S. Federal Reserve even though economic growth is slowing.

The Associated Press