The government has cut its GDP growth forecast for this year to one to two percent, as it warned that the local economy will continue to be bogged down by the external environment.

The latest projection, released on Friday, was down from the two to 3.5 percent expansion that Financial Secretary Paul Chan announced in February.

"Global economic prospects have worsened, which may continue to weigh on Hong Kong's export performance," said Government Economist Adolph Leung.

He said local growth will continue to be dragged by the Ukraine conflict that has pushed up energy prices and disrupted supply chains, policy tightening by major central banks, as well as uncertainties from the global pandemic and Sino-US relations.

The SAR reported a four percent year-on-year contraction for the first quarter, as a fifth wave of infections disrupted cross-border transport and dragged down Hong Kong's export performance, hammered the retail and catering sectors and discouraged investment.

Achieving even the revised target may still be difficult, said one economist.

"I'm not quite positive about the future change in the economic environment," said Thomas Yuen, an assistant professor of economics at Shue Yan University.

He said he expects supply-chain disruptions to remain a major problem for the Hong Kong economy.

"The Covid situation on the mainland is an issue, because their production lines are actually delayed," explained Yuen.

"If China is delaying the goods that pass through Hong Kong, re-export will be reducing."

Yuen said he expects the local economy to expand only slightly from last year to record a GDP growth of one percent – the low end of the government's revised forecast.