Government data released on Friday shows Hong Kong is now officially in recession.
For the first time in 10 years, the economy of the dynamic independent province of China, is retreating. Plagued by violent protests and a searing trade war between China and the United States, Hong Kong has put in its worst quarter in a decade.
In the third quarter, from 1 July to 30 September 2019, the economy sank by 3.2% compared to the second quarter.
As the second quarter GDP (gross domestic product) reading was also negative, Hong Kong officially is now in recession, having met the qualifying requirement of two consecutive quarters of contraction.
The state of the economy is now equivalent to what it was at the onset of the GFC (global financial crisis) in 2008-9.
To make matters worse, there is nothing on the horizon to say the deterioration will not continue.
The protests on the street have becoming increasingly violent, to the point where people are being killed.
Once a vibrant tourist attraction for international visitors, and from the Chinese mainland, the province’s hotels these days are deserted, and many of the numerous flights into the island are largely empty. Tourist arrivals in August fell nearly 40% from the same period last year.
Retail sales are plunging. In August, sales were down 23% compared to the same month last year, the worst monthly report ever.
In September retail sales tumbled 18.3%.
Hong Kong’s key stock market index, the Hang Seng, has been dropping on several days by hundreds of points as investors flee.
“We assume the violent protests will continue for the whole year in 2020 unless the Hong Kong government will do something really special, which it seems to be avoiding,” Iris Pang, an economist at ING China said Friday.