Hong Kong enters its first recession in a decade after months of protests
- Hong Kong officially entered its first recession since the financial crisis after posting a 3.2% GDP contraction in the third quarter.
- The economic slowdown is primarily driven by antigovernment protests that dominated the July-to-September period. The demonstrations have hit the city's business owners, tourism industry, and investors.
- The demonstrations have "shaken" multiple facets of Hong Kong's economy, "exacerbating an already-weak economy," Financial Secretary Paul Chan said in an October 22 speech.
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Hong Kong officially entered its first recession since the financial crisis after its economy shrank 3.2% in the third quarter, data released Thursday show.
The economic contraction is the city's biggest quarter-over-quarter GDP drop since 2009. Antigovernment protests dominated the July-to-September period, roiling business owners, the tourism industry, and investors.
The city's economy shrank 0.5% in the second quarter, and has contracted 2.9% over the past year. An economy enters recession after experiencing two consecutive quarters of GDP decline.
Protests began in June over a proposed extradition law that would allow Hong Kong residents to be tried in mainland China. Hong Kong is a semiautonomous region with its own legal system, and though the bill was pulled in September, demonstrations have continued.
"The continuing social unrest has shaken the retail trade, restaurants, tourism and other industries, exacerbating an already-weak economy," Financial Secretary Paul Chan said in an October 22 speech.
Uncertainty created by the protests has hit several facets of Hong Kong's economy. The decrease in retail sales volume plummeted to 25.3% in August from 13.1% in July, Chan said in a Sunday blog post. The tourism industry is in its worst situation since 2003's SARS virus outbreak. Total exports dropped more than 6% in the third quarter. The city's main airport was closed for days as protesters occupied its facilities.
Chan announced on October 22 a number of programs meant to provide economic stimulus to ailing businesses. The measures include a fuel subsidy for transport trade, a survey fee subsidy for marine vessels, and extending rental concessions to public car parks, supermarkets, and retailers.
The government's monetary authority also cut capital requirements for banks in October to spur additional lending to businesses.
"Our society and economy need breathing and healing spaces and a chance to start afresh," Chan wrote.
It remains to be seen whether the government's relief measures will be effective. The protests show no sign of stopping, and macroeconomic stress from global trade tensions and other slowing economies may prolong Hong Kong's downturn.
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