Hong Kong recession deepens due to coronavirus pandemic
Hong Kong’s recession deepened in the first quarter as its economy, which had already been impacted by anti-government protests last year, was hit by the coronavirus pandemic.
Hong Kong’s economy shrank by 5.3 per cent in the first quarter of this year compared to the previous quarter.
On an annual basis the economy contracted 8.9 per cent between January and March, compared to a revised three per cent in the final quarter of last year.
That was the steepest contraction for a single quarter since records began.
Gross Domestic Product (GDP) is forecast to contract between four per cent seven per cent this year following the outbreak of Covid-19. Previous government estimates ranged between a decline of 1.5 per cent to growth of 0.5 per cent.
The pandemic has crushed Hong Kong’s tourism industry and impacted the retail sector, which are two key contributors to its GDP.
“Hong Kong’s near-term economic outlook is subject to very high uncertainties, hinging crucially on the evolving global public health and economic situations,” the government said.
The city has been successful in keeping the outbreak under control, having confirmed 1,041 cases and four deaths, which has boosted hopes of a resumption of economic activity over the coming months.
However, this could also see a renewed anti-government protests, analysts said.
“Social distancing will continue to hurt catering and shopping, but another issue is … I believe there will be more protests over the summer holidays,” Iris Pang, Greater China economist at ING, told Reuters.