The Hong Kong economy’s first recession in a decade deepened in the fourth quarter of last year, weighed down by often violent anti-government protests and the US-China trade dispute, advanced estimates showed yesterday.
The economy shrank by a seasonally adjusted 0.4 percent in October to December from the previous quarter, versus a revised 3.0 percent in July to September.
On an annual basis, the economy contracted 2.9 percent, compared with a revised 2.8 percent in the third quarter.
Economists forecast a 3.9 percent contraction in the final three months of last year compared with a year earlier, the median of estimates compiled by Bloomberg showed.
For the whole of last year, real GDP contracted by 1.2 percent, the first annual decline since 2009.
Months of unrest last year in Hong Kong plunged the financial and trading hub into its worst crisis since it reverted from British to Chinese rule in 1997.
Analysts predict an even worse first quarter this year, as measures to restrict cross-border mobility to fight the spread of a new coronavirus, which originated in mainland China, deal a further blow to tourism, retail and other business.
Drawing on experience from the 2003 SARS epidemic in the territory, Aries Wong (黃健明), a lecturer at Hong Kong Baptist University’s School of Business, estimates that visitor arrivals from mainland China could drop by an additional 10 to 20 percentage points, and annual economic growth could be cut by 0.5 percentage points if the outbreak subsides by July — increasing to 1 percentage point if it continues for the whole year.
“Surely the virus is going to add a bit more pressure on tourism and retail,” Wong said.
The negative effects might be limited as the key affected sectors were already hit hard last year, ING Bank NV economist Iris Pang (彭藹嬈) said, although that might not be much comfort to shopkeepers or restaurant owners.
“The impacts are negative on retailers, restaurants, gyms, swimming pools, mass transportation and inbound and outbound tourism activities, but as retailers have been hit by the violent protests, the marginal impact from the coronavirus should be moderate,” she said.
Additional reporting by Bloomberg
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