A man wearing a preventative measure wearing a face mask walks past a closed bar in Hong Kong.
May James | SOPA images | LightRocket | Getty Images
The Hong Kong government on Friday downgraded its full-year forecast following a recent surge in coronavirus cases that threaten to further derail the city’s economy.
The government now expects the city’s economy to shrink by between 6% and 8% by 2020, compared to its previous projection for a contract of between 4% and 7%.
“If the current wave of local infection can be contained within a short period of time and can lead to a further sharp decline in the external environment, economic performance for 2020 as a whole may hopefully fall within the upper half of the range,” according to a statement by government economist Andrew Au.
The downturn came after Hong Kong’s economy fell 9% in the second quarter compared to a year ago. It was the fourth consecutive quarter of the year-over-year decline in gross domestic product, official statistics showed.
The updated data on the economic performance of the city are exactly in line with its official estimates ahead.
“Hong Kong’s economy remained very weak in the second quarter of 2020 as the COVID-19 pandemic continued with heavy blows against global and local economic activities,” Au said. Covid-19 is the formal name of the coronavirus disease that has so far killed more than 750,000 people around the world.
Hong Kong has reported more than 4,300 cumulative cases, including 66 deaths, according to official statistics.
Economists had previously warned that Hong Kong – a semi-autonomous Chinese territory and a major financial hub in Asia – would struggle to recover from its economic downturn given a recent upsurge in coronavirus cases. Several analysts downgraded their GDP forecasts for the city last month.
The renewed outbreak, which began in July, prompted the government to tighten social distance measures that included a ban on large gatherings and restrictions on food services at restaurants. Hong Kong list runner-up Carrie Lam also warned that the increase in daily infections could cost the city’s health care facilities and lives.
The Hong Kong economy was already in a recession before the coronavirus pandemic. It was in part the result of large-scale pro-democracy protests that raged for months last year, hurting businesses and tourism-related industries. Global uncertainties, such as the US-China trade war, also left a heavy blow to its economy.
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