HONG KONG - Hong Kong is expected to confirm on Friday it plunged into recession for the first time in a decade, amid concerns the economy could be in even worse shape than feared as months of anti-government protests take a heavy toll.
Preliminary figures in October showed the Chinese-ruled city’s economy shrank by 3.2% in July-September from the preceding period, contracting for a second straight quarter and meeting the technical definition of a recession.
With no end to the increasingly violent protests in sight, analysts say the slump could be long and deep, with gross domestic product seen shrinking further this quarter and well into next year.
The financial and trade center was already under strong pressure from the prolonged tariff war between Washington and Beijing, but the increasingly violent demonstrations, which have gone on for more than five months, have delivered a decisive blow.
“We assume the violent protests will continue for the whole year in 2020 unless the Hong Kong government will do something really special (to end the conflict), which it seems to be avoiding,” said Iris Pang, Greater China economist at ING, who expects the economy to shrink by 2.2% in 2019 and 5.3% in 2020.
Frequent transport disruptions, violent clashes between police and protesters and the use of tear gas have battered the retail sector and scared off tourists, especially from mainland China, who made up around 80% of the 65.1 million visitors to the city in 2018.