Economy Projected To Shrink 1.3 Percent For 2019

Hong Kong’s economy could suffer its first contraction since 2009, the government warned on Friday as it further cut its GDP forecast for the year to negative 1.3 percent.

This compares to an estimate of GDP growth of between 0 and 1 percent made in August.

Government economist Andrew Au said the nonstop protests over the past five months have hit multiple sectors of the economy.

“Domestically, the local social incidents, with intensifying violence in the past few months, have kept visitors away, taken a heavy toll on consumption demand, and seriously dampened investor sentiment”, he said.

Au added that recent surveys show business sentiment has turned “very pessimistic”, as recent protests have been getting worse, and there are no signs that they will stop anytime soon.

“Consumption and investment demand will likely remain in the doldrums for the rest of the year”, he concluded.

The government also confirmed that the territory has slipped into a technical recession, backing up its preliminary figures for the third quarter showing that the economy contracted by 3.2 percent from the previous three-month period.

Au says the poor economy will likely result in a spike in the jobless rate going foward – with grassroots workers most at risk.

While the overall unemployment rate rose just marginally to 2.9 percent for the July-September quarter, Au notes that specific sectors were much harder hit.

The jobless rate for the food and beverage sector, he said, rose to a six-year high of six percent.

“The overall unemployment rate is expected to be under significant upward pressures in the period ahead”, he warned. “This will hurt the lower-skill workers, as this sector employ many grassroot workers.”