Following five months of anti-government protests that have shown no sign of abating, the city of Hong Kong has fallen into a technical recession, the city’s Financial Secretary Paul Chan said on Monday.
A recession is defined as a decline of economic activity over two consecutive quarters. In a blog post, Paul Chan wrote that “the blow to our economy is comprehensive”, adding that estimates for third-quarter GDP showed two successive quarters of contraction.
Chan said it would be “extremely difficult” to achieve the government’s pre-protest forecast of 0-1 per cent annual economic growth.
Chan added that exports in September had fallen 7.3 per cent year-on-year and that tourist footfalls had come down by nearly 50 per cent in the first half of October. In August, footfalls had come down by 40 per cent (which Chan covered in another blog post at the time).
In addition, Chan wrote that the average occupancy rate of hotel rooms had declined, dropping 28 per cent in August, while retail sales registered their largest-ever monthly declines between July and August.
Hong Kong’s economy was estimated at $363 billion in 2018 and by itself contributes 0.59 per cent of global GDP.
Multinational companies stationed in Hong Kong have also been hit by protests. HSBC bank lowered its growth forecasts on Monday, as net profits dropped by 24 per cent. Most of HSBC’s revenues come from Asia, with the bank one of three lenders authorised to issue currency in Hong Kong.
On Sunday, protestors set fire to shops and hurled petrol bombs at police, who responded with tear gas, water cannons and rubber bullets according to Reuters. Hopes of a comedown in the protests following the withdrawal of the anti-extradition bill that had sparked protests in the first place have since declined, as a larger pro-democracy movements takes over the streets with demands including universal suffrage and an independent inquiry into the Hong Kong Police.