HK In Technical Recession, Third Quarter Slumps 3.2%

Hong Kong’s economy has slid into a technical recession for the first time in a decade, shrinking by 3.2 percent in the third quarter from the previous three-month period, as import and exports, retail sales, and tourism figures fell off a cliff.

A government statement blamed the poor performance on both the effects of the US-China trade war and an “abrupt deterioration” in the economy due to the “severe impacts” of the ongoing Hong Kong protests.

The economy had already contracted by 0.5 percent in the second quarter, meaning the city has new suffered two successive quarters of negative growth – meeting the technical definition of a recession.

Preliminary government figures released on Thursday also showed that, on a year-on-year basis, the economy shrank by 2.9 percent – the first time since 2009 that the GDP has contracted according to this metric.

For the first nine months of the year, Hong Kong’s economy has declined 0.7 over the same period in 2018, and the government now says it’s “very likely” to record negative growth for 2019 as a whole.

A government spokesman said the continuing unrest took a particularly heavy toll on inbound tourism, resulting in a 13.7 percent plunge in the export of services from June to September – accelerating from the 1.1 percent drop in the second quarter.

This is the biggest year-on-year drop since the second quarter of 2003, when Sars hit the city.

Domestic spending fell 3.5 percent from a year earlier, compared with a 1.3 percent rise in the second quarter, in the first year-on-year decline in private consumption expenditure in over a decade.

Imports and export figures were equally bleak – the fall in exports accelerated to 7 percent, while imports plunged 11.1 percent.

The government doesn’t expect the poor figures to be a blip, either.

“Looking ahead, with global economic growth expected to remain soft in the near term, Hong Kong’s exports are unlikely to show any visible improvement”, the spokesman said.

“Moreover, as the adverse impacts of the local social incidents have yet to show signs of abating, private consumption and investment sentiment will continue to be affected. The Hong Kong economy will still face notable downward pressures in the rest of the year”, he added.

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