Chan wrote on Sunday that the pandemic continues to affect the economy despite a slight revival after social distancing rules were relaxed and a round of consumption vouchers were released.

He also noted that retail sales drop 13.8 percent in March, and fell 7.6 percent in Q1. The catering sector faced even more pressure, he added.

“The total revenue of restaurants in March was only HK$3.93 billion, a record low for monthly figures,” he wrote. The total in the first quarter was HK$15.1 billion, a 16-year low.

Chan said that US Federal Reserve interest rate hikes could increase mortgage payments for homebuyers. The finance chief also warned that the Fed’s rate hikes would exert pressure on citizens and small and medium-sized enterprises.

“It seems that a downward adjustment is inevitable,” Chan said.

The economic growth forecast, currently under review, is due to release in the coming week.

Chan forecasted in his budget address February that the economy would perform better in the second half of the year, achieving a 2 percent to 3.5 percent growth overall. Hong Kong’s economy contracted by 4 percent in first quarter of 2022.