Ongoing social unrest and the escalating trade tensions place downward pressure on economic growth.
Hong Kong will technically fall into recession should the third quarter’s GDP post negative growth, financial secretary Paul Chan Mo-po remarked on Wednesday.
Speaking after the ninth meeting of the Financial Leaders Forum, Chan noted that GDP growth for the second quarter fell by 0.3% quarter-to-quarter, real terms on a seasonally-adjusted basis.
The Census and Statistics Department (C&SD) earlier reported that although Hong Kong’s GDP grew by 0.6% YoY in Q2 , the economy shrunk by 0.3% compared to the first three months of the year.
“Domestically we are still struggling with our own social issues and externally there are increasing external uncertainties caused by escalating US-China trade conflict as well as other geo-political situations,” Chan said.
“For the third quarter of this year, if we were to have a negative growth again, then we would be technically in recession. This situation is causing some concern, and we'd like to highlight this risk to our people so that we will all stay vigilant and pay more attention to our economic and livelihood issues, “ he added.
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Chan’s remarks echo his earlier comments that Hong Kong could plunge into a recession should the mass protests, coupled with trade uncertainties, continue.
On Monday, as Hong Kong faced its largest city-wide strike since 1967, Chan asked protestors to “think twice as they carry on their movements.” The day was marked with hundreds of flight cancellations, suspended or partially-suspended MTR lines, and traffic jams as protestors took to the streets to voice out their concerns. Some economists estimated economic losses as much as $1.2b.
Chan also highlighted the falling retail sales figures, which according to data from C&SD fell for the fifth straight month by 6.7% YoY in June and slipped 3.1% YoY in H1 compared to the previous year. In the report, a government official cited economic uncertainties and the ongoing mass demonstrations as catalysts for the cautious local consumer sentiment.
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