The Hong Kong government lowered its economic growth expectations on Thursday and estimated that the city’s Gross Domestic Product will grow between zero to one per cent in 2019 due to “strong economic headwinds”.
“If growth does hit 0 to 1 per cent, this will be the worst situation we have faced since 2009,” Hong Kong Financial Secretary Paul Chan Mo-po said in a press conference without directly referring to the protests as a cause.
“If Hong Kong’s economy grows in the third quarter at a similar pace to the second, the city will be technically in a recession,” he was quoted as saying by Efe news.
The technical recession would mean that the local GDP would have contracted for two consecutive quarters.
The data shows that during the first quarter, Hong Kong’s economy grew by 1.3 per cent, while in the April-June period it contracted by 0.3 per cent.
Chan also announced on Thursday a number of measures that are not officially intended to resolve the political crisis facing the Hong Kong administration but to take precautions in the face of the coming bad economic times.
The measures included a “mini-budget” valued at 19.1 billion Hong Kong dollars ($2.44 billion).
According to the South China Morning Post, the measures also included increasing loan guarantees for small and medium-sized enterprises (SMEs) as well as lowering rents for hospitality businesses.
The British consultancy company, Capital Economics, predicted the protests’ economic impact could cause a contraction of one per cent in the third quarter, ending the year with an annual growth of 0.5 per cent.
According to Capital Economics, the most affected sector would be tourism, which contributes to around four per cent of the total GDP.
Hong Kong is witnessing the 11th consecutive week of demonstrations that erupted in June, sparked by the government’s controversial extradition bill that was later shelved by Hong Kong Chief Executive Carrie Lam after intense popular pressure.
The controversy surrounding the now-defunct extradition bill, which would have enabled fugitives to be transferred from Hong Kong to mainland China to stand trial under the latter’s opaque legal system, has morphed into a set of wider demands for democracy in the ex-British colony.
Hong Kong’s economy would face a severe contraction that could threaten the strength of the Hong Kong dollar if the protests continued or, in the extreme case, the Chinese Army intervened, Capital Economics warned. (IANS)