Gross domestic product is expected to fall 3.2 percent in 2022, the government said Friday. That’s more pessimistic than an earlier prediction of a range of a 0.5 percent drop to a 0.5 percent expansion given in August.

The revision is due to the economy’s performance through the first nine months of the year, along with “the subdued short-term outlook,” according to a statement from Adolph Leung, the government’s economist.

“Looking forward, the markedly deteriorating external environment will continue to pose immense pressure on Hong Kong’s export performance,” Leung said. “Elevated inflation and continued monetary policy tightening in major advanced economies will dampen global demand further.”

The city’s third-quarter GDP contraction remained unchanged at a 4.5 percent fall, the same as an earlier estimate.

This is the third time officials have cut their 2022 forecast this year, after earlier downward revisions in May and August.

Economists downgraded Hong Kong’s growth outlook for the year after a disappointing slowdown in the July-to-September period, when the city recorded its worst fall in GDP since 2020. Goldman Sachs Group Inc. said after initial estimates were released that it expected the economy to contract worse than expected, while Citigroup Inc. economists downgraded their forecast from a slight expansion to a contraction.

Hong Kong’s economy has been hobbled by more than two years of Covid-related border restrictions, which have fueled a talent exodus from the city and strained trade, especially with China and its own Covid Zero policy. The financial hub has also been under pressure from interest rate hikes by the hawkish US Federal Reserve to restrain raging inflation, which the city follows given its currency peg to the US dollar.

Financial Secretary Paul Chan wrote in a Sunday blog post about the city’s urgent need to increase investments and economic momentum to attract businesses and talent, noting that it was “difficult to be optimistic” about the full-year GDP figures.

The city’s cloudy economic outlook comes as Chief Executive John Lee has sought to restore Hong Kong’s status as an international finance hub. Lee announced measures to attract foreign talent and ease property pressures last month, and recently rolled out the red carpet for global banking executives at a high-profile summit in the city.

Still, the business community has called for the government to do more to support growth, including further relaxing stamp duties and fully reopening its border with the rest of the world. While the city axed mandatory hotel quarantine in September, it has retained some restrictions and testing requirements for inbound international travelers.

Hong Kong is struggling from weak consumption, in part from sluggish inbound tourism from remaining Covid restrictions, and from human capital outflow, said DBS Bank Ltd. economist Samuel Tse, before the forecast announcement. Its growth is also being weighed down by rising interest rates, which may push local banks’ prime rates to 6 percent in the first quarter next year, he added.

“The economy is not doing well at all fronts,” Tse said. “Investment sentiment remains weak due to rate hikes and the gloomy economic outlook.”