Economy Contracts 8.9% In Q1

(To watch the full press conference with sign language interpretation, click here.)

With COVID-19 evolving into a pandemic in March, Hong Kong’s economy in the first quarter contracted sharply by 8.9% over a year earlier, after declining by 3% in the preceding quarter, the Government announced today.

On a seasonally adjusted quarter-to-quarter comparison, real GDP plunged by 5.3%.

Both rates of decline were the steepest for a single quarter on record.

Total exports of goods saw an enlarged year-on-year fall of 9.9% in real terms, weighed by the serious disruptions to Mainland economic activities, the regional supply chains and related trading activities amid the threat of COVID-19, and later by the sharp moderation of economic activities worldwide.

Exports of services plummeted by a record 37.8% in real terms from a year earlier, with inbound tourism at a standstill in February and March and cross-boundary transport and commercial services falling distinctly.

The labour market further deteriorated in the first quarter, with the seasonally adjusted unemployment rate soaring to 4.2%, the highest in more than nine years. Total employment saw a record decrease.

The residential property market slowed down visibly in the first quarter. The number of transactions dropped 21% to 10,204 over the preceding quarter. Flat prices edged down by 1% during the first quarter.

The headline and underlying consumer price inflation forecasts for this year are revised downwards to 1.4% and 2.2%.

Considering the sharp economic contraction in the first quarter, the high uncertainties surrounding the pandemic, the difficult global economic situation, but also the cushioning effects of the massive relief measures rolled out by the Government, the real GDP growth forecast for 2020 as a whole has been revised downwards to -4% to -7%, as announced by the Financial Secretary in April.  

Delivering the First Quarter Economic Report 2020, Government Economist Andrew Au said if the local epidemic remains well contained and Hong Kong’s major trading partners are successful in reopening their economies, the city’s economic performance will hopefully improve gradually in the second half of the year.

The Government will continue to closely monitor the situation and introduce measures as necessary to support enterprises and safeguard jobs.