A salesman examines his phone while waiting for customers in a grocery store in Tsim Sha Tsui. The protests hit the city's retail sector with an 24.3 percent decline year-on-year in terms of sales value in October. (PHOTO / CHINA DAILY)
Innocent as most people in the city might be, Hong Kong society as a whole is paying a heavy price for the months-long social unrest that has sent the special administrative region’s economy on a downward spiral.
Official figures released by the SAR government the other day were the latest evidence confirming not only an unpalatable recession but also a deteriorating fiscal situation for the government.
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The economy contracted 2.9 percent in the third quarter from the same period last year, the first year-on-year decline in 10 years, and SAR Financial Secretary Paul Chan Mopo warned on Monday that the government was facing a budget shortfall for the first time in 15 years because of the poor economic situation.
Retail sales suffered a record 24.3 percent year-on-year decline in October, the fourth month of double-digit decline
These are the results of the double whammy that has hit the city over the past year, particularly since June. The prolonged Sino-US trade dispute has had a negative impact on exports and investment, while the unrest has dealt a fatal blow to many other aspects of the SAR’s economic activity, including consumption, tourism and investment.
Retail sales suffered a record 24.3 percent year-on-year decline in October, the fourth month of double-digit decline. Exports of goods were down 7.1 percent in the third quarter, while exports of services fell by 13.8 percent, the biggest drop since the second quarter of 2003. Overall investment expenditure plunged 16.3 percent, and home prices retreated by 5 percent in October from May.
Inbound tourism has been especially hardhit by the violent protests. Visitors, particularly those from the Chinese mainland, have been deterred by the animosity of the radical protesters. As a result, reports of workers in the hospitality sector being forced to take non-voluntary leave are no longer considered big news.
Other sectors have not fared any better. Small and medium-sized enterprises have proved particularly vulnerable, with quite a few having gone out of business while many more are struggling on the verge of bankruptcy.
To the comfort of Hong Kong people, the unemployment rate has remained relatively low. But economists are warning that it is just a matter of time before it will start rising rapidly, as the full impact of the violent protests on jobs will emerge in a few months. Indeed, some economists and business leaders have forecast a wave of layoffs after the Lunar New Year holiday in January.
The SAR’s economy is arguably in the worst shape it has been in for years. It is on track to slide into the worst recession in decades unless the social unrest stops and order and peace are restored.
Should the violent disturbances continue, tough times lie ahead for Hong Kong residents - both the innocent and those responsible for the unrest.
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