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Sunday, October 13, 2019, 17:34
Continued violence bringing HK to economic abyss
By Xinhua
Sunday, October 13, 2019, 17:34 By Xinhua

This Oct 2, 2019 photo shows a view of West Kowloon High-speed Railway Station in Hong Kong. Number of travelers to the Asian hub decreased drastically due to continuing violent protests. (LU YE / XINHUA)

HONG KONG – A slump in visitors to Hong Kong during the first week of October, normally dubbed as the Golden Week for tourists, came as the latest signal that an upheaval that has lasted since June is plunging the city into an economic abyss.

"Visitors to Hong Kong halved from a year earlier during the first week of October, and the employment in the tourism sector is worrying," said Edward Yau, secretary for commerce and economic development of the Hong Kong Special Administrative Region (HKSAR) government.

When exports, retail sales and even investment are weak, it is hard to be optimistic about the performance of the overall economy. 

Paul Chan Mo-po, Financial Secretary, Hong Kong

Tourism was not the only sector falling victim to violent incidents since June.

READ MORE: Violence: 'Pearl of the Orient' economic outlook dims

nalysts have pointed out that a wide range of industries from retail to catering are embracing a chilly winter as the continued unrest added huge pressure on the financial and trade hub that had already been grappling with the impact from a global economic downturn since last year.

  • Hong Kong's exports fell 6.3 percent year on year in August, the 10th straight decline.

  • Retail sales tumbled 23 percent from a year ago in August, the sharpest monthly drop on record, marking a six-month losing streak.

  • The dropping of visitors has been widening since July and about 40 countries and regions have issued warnings concerning travel to Hong Kong.

  • An official index measuring the willingness to invest of small and medium-sized enterprises saw a steep drop in August to 32.1, the lowest reading since the index started to be published in 2011.

  • • Private home prices had fallen for three months in a row till August, and the vacancy rate of office buildings rose to a five-year high.

Fire rages at an exit of the Hong Kong subway's Central Station after radical protesters went on an arson spree on Sept 8, 2019. (PHOTO / CHINA DAILY)

"When exports, retail sales and even investment are weak, it is hard to be optimistic about the performance of the overall economy," Paul Chan, financial secretary of the HKSAR government said. "If the quarter-on-quarter growth rate turns negative again in the third quarter, Hong Kong's economy will fall into a technical recession."

The market has already had a pretty clear idea about the current situation although the official figures have yet to be released, added Chan.

This Sept 30, 2019 shows a view of a seemingly deserted Disneyland Resort in Hong Kong due to slump in visitors. (LU YE / XINHUA)

According to HKSAR government economist Andrew Au, shrinking consumption will also lead to a further drop in investment, contributing to even more feeble inner growth impetus.

ALSO READ: Tourism unions call for govt aid amid hardship

Both the University of Hong Kong (HKU) and DBS Bank have predicted zero growth for Hong Kong this year in their respective reports, and rating agency S&P revised down Hong Kong's economic growth forecast for this year from 2.2 percent to 0.2 percent earlier this week.

Observers warned that the real challenge for Hong Kong will come when the jobless rate starts a hike.

Hong Kong's overall unemployment rate has inched up 0.1 percentage point to 2.9 percent, with the rate of retail, accommodation and catering up markedly to 4.6 percent. The HKU said in a report that the situation could continue to worsen and residents were much less confident in the job market.

This Aug 17, 2019 photo shows an empty street in To Kwa Wan before the start of a protest in the district, Hong Kong. (PHOTO /  CHINA DAILY)

Hong Kong is facing a more severe situation than any other previous crises including the SARS, HKSAR Chief Executive Carrie Lam Cheng Yuet-ngor said, stressing that the economy will be affected for a long time and the recovery will also be arduous.

READ MORE: HK protests bring record 23% retail sales slump in August

The HKSAR government has carried out an array of pro-growth policies since mid-August, including a scheme worth HK$19.1 billion (US$2.44 billion) to relieve the burden on businesses and individuals amid the economic hardship.

Bolder moves could also be expected in policy address to be published soon, such as measures to increase the land supply and diversify the industrial structure.

Lam promised continued effort of the HKSAR government, but also stressed that to revive the economy and heal the split society, the foundation is the same – the widespread violence must stop and Hong Kong shall no longer be harmed.

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