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Hong Kong’s gross domestic product (GDP) fell 8.9 percent on-year in the first three months of the year, according to preliminary data released Monday by the city’s statistical office with a special administrative status. Hong Kong’s GDP has now fallen annually for the third consecutive quarter, but the epidemic has exacerbated the situation, with the economy falling sharply 5.3 percent below the last quarter of last year. Preliminary data released Monday represents a more severe decline than the 8.3 percent contraction in the third quarter of 1998, the worst low since the Asian financial crisis.
Final GDP data will also be released by the agency before the end of May.
As the SCMP notes: Hong Kong has spent almost the entire first quarter under bribery, the city leadership is only considering easing anti-epidemic precautions in just a few days. The closings also put exports, retail and investment, which are the engines of growth, in a difficult position. In the first quarter, exports fell 9.7 percent on-year due to disruptions in supply chains and trade. Service exports fell historically, by 37.8 percent due to stagnation in tourism, while investment fell by 13.9 percent in the first quarter year-on-year.
Hong Kong Finance Minister Paul Chan said the economic situation was a serious test. “We are in a severe recession,” said the SCMP. The Minister believed that unity was necessary not only in the fight against the epidemic, but also to boost consumption and economic development, because only then could the economic situation stabilize to a certain extent in the second quarter. “If the epidemic situation improves worldwide, we can gradually recover from the recession by the end of the year,” he said.
To help the economy, the Hong Kong government plans to launch a package of measures worth Hong Kong dollars 290 billion (12 billion forints) to alleviate pressure on businesses and people as well as protect everyday depositors. The amount corresponds to 9.5 percent of Hong Kong’s GDP.
Even last Wednesday, the finance minister warned that the Hong Kong economy could perform worse than expected and fall as much as 4 to 7 percent in the current fiscal year due to the long-term effects of the pandemic.
Hong Kong’s benchmark stock index Hang Seng lost 4.18 percent amid concerns ahead of preliminary data announcements and mounting tensions between Beijing and Washington.
Cover image: Shutterstock
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