HONG KONG (China Daily/ANN): Hong Kong’s economy shrank by 9 per cent in the second quarter from a year earlier as the coronavirus pandemic and social unrest extend the city’s first recession in a decade.
The decline in gross domestic product eased slightly from a revised 9.1 per cent contraction in January-March, which was the worst quarterly drop since records began in 1974. Moody’s Analytics had expected a contraction of 11.9 per cent, Capital Economics 10.5 per cent, Bank of East Asia 9 percent and ING 8 per cent.
But on a quarterly, seasonally adjusted basis, the economy shrank just 0.1 per cent, compared with a revised 5.5 percent contraction in the previous three months, advance reading from the Census and Statistics Department of the Hong Kong government showed.
Hong Kong’s economy shows few signs of a recovery after suffering repeated setbacks over the past year.
The US-China trade war and anti-government protests stemming from the extradition bill incident first pushed the city into recession in the second half of 2019.
Then the global pandemic this year eroded what little tourism remained, decimating the city’s retail, food and beverage and hospitality industries.
This latest decline marks four consecutive quarters of economic contraction, equaling the period after the global financial crisis. The current stretch is only one quarter behind the longest recession on record, when Hong Kong’s economy shrank for five quarters in 1998-1999.
The city’s unemployment rate has surged to a 15-year high, leaving thousands jobless and the city’s poor even more vulnerable. Retail sales likely had a double-digit fall again in June, according to forecasts of data due Thursday.
Further putting pressure on the economy are efforts to contain a third wave of virus infections, with the government imposing tighter restrictions on the restaurant industry and limiting public gatherings to two people.
In a press release, a spokesman for the special administrative region’s government said Hong Kong's overall economic conditions remained very weak in the second quarter of 2020 as the Covid-19 pandemic continued to severely hit global and local economic activities.
Yet, as the epidemic situation was largely under control in Hong Kong in May and June, and the recovery of the mainland economy also helped partly offset the external headwinds facing Hong Kong's exports of goods.
The spokesman added that the Covid-19 pandemic will remain a key threat to the global economic outlook.
"While the US and the euro area economies seem to have got out of their troughs, their recovery paths could be slow and bumpy until an effective vaccine or treatment is found. The evolving China-US relations and heightened geopolitical tensions also add to uncertainties," the spokesman said.
The challenging external environment will likely constrain Hong Kong's export performance in the near term, the spokesman said.
In a July 26 blog post on his website, Financial Secretary Paul Chan Mo-po said: “It may take longer than originally expected for the local economy to recover.” - China Daily/Asia News Network
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