Hong Kong confirmed to be in recession
Hong Kong braces itself for Hallowe’en protest march as recession hits the city-state
Hong Kong police are tightening security in preparation for potential clashes this evening (October 31) between masked “Hallowe’en” pro-democracy protesters and clubbers in fancy-dress in the heart of the city.
The effect of the protests on Hong Kong’s economy that began in June has been disastrous, with tourism hitting the lowest levels since the 2003 SARS crisis. Hotels have been struggling to fill rooms and retail sales were down 23 per cent in August.
Figures released on October 31 revealed that Hong Kong’s economy shrank by 3.2 per cent during July-September from the previous quarter, pushing the city into technical recession. This is severe following the 0.5 per cent contraction recorded in the second quarter and far worse than anticipated.
Make-up and fragrance firm Estee Lauder is just one of the many businesses affected, telling shareholders that net sales have fallen due to “events impacting key shopping areas”. Shoppers are staying away from the luxury stores in the upmarket Tsim Sha Tsui district, which has become a key battleground for police and protestors. The Associated Press wrote that “jewellery stores have no customers and related businesses like transportation are languishing”.
Tommy Wu, a Hong Kong-based economist with Oxford Economics, said, “Much of the pressure is now coming from the political unrest. The trade war itself would cause Hong Kong’s GDP growth to slow but not a contraction, while the political unrest could.”
With more protests planned for this evening, Hong Kong’s political crisis shows no imminent signs of resolution.
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