Hong Kong Enters Deep Recession

Back to Article
Back to Article

Hong Kong Enters Deep Recession

Lilian Chong, Staff Writer

The Hong Kong protests have been ongoing for months, and the economy has just entered its first recession in a decade. This sustaining protest has impacts to Hong Kong’s tourism, sales, and exports from the U.S.-China trade war. The region’s economy has plummeted as low as 3.2%, making the future economy less likely to expand.

Economists have made predictions for Hong Kong’s near future; consequences may remain for the next few months. Due to the intensity of the protests, the tourism rate has drastically declined, with only 30% tourists remaining. Tourists disappearing has resulted in bankruptcies in businesses. For the past few months, many stores have struggled to sustain a stable and growing business due to locals willing to spend less and decline in tourists. After the recession takes place in the third quarter, growth in Hong Kong’s economy in the fourth quarter is inconceivable to many economists and trade experts. 

From large to small businesses, profits have dwindled from essentially the highest rates to the lowest rates possible. According to CNBC, local businesses have revealed that the financial impact of domestic unrest have recently affected stores around the bustling Wan Chai district. 

Tackling the financial problems in Hong Kong, non-essential businesses have grimly noticed fewer people around the district. A family-run flower shop that has been planted in the district of Wan Chai for 15 years recently has fewer people purchasing bouquets. Kitty Chan, who works at her parent’s flower shop estimated that profits have dropped 50% for the shop. Similar to the flower store, a pharmacy also in Wan Chai has encountered a major decline. 

Andy Ho, who works at the pharmacy suggested, “Our store has been here for 50 years. Our business has declined in recent months — close to 40%.” However, businesses that run essential based products such as home necessities are still in hope for positive growth in the region’s economy.  

Hong Kong’s particular weakness is pointed out to be its reliance on tourism and dependence on China’s economy. The protests that have been disrupting businesses for months have “impaired business confidence and suppressed investment demands,” noted Bank of America Merrill Lynch. The bank has also noted that Hong Kong may be facing a “prolonged recession”.

Moreover, Hong Kong’s negative growth was expected to appear at some point in the process according to Billy Wong, deputy director of research at the Hong Kong Trade Development Council (HKTDC). In no sight or conclusion to the protest and the trade war, Hong Kong “will remain weak,” HKTDC’s Wong quoted in a statement.

Photo courtesy of BBC.COM