Hong Kong, one of the business capitals of the world, is in recession, according to its Census and Statistics Department. Hong Kong’s economy, if measured independently from China, which controls the region, would rank 31st in the world with a gross domestic producr of $373 billion, about the same as Israel’s and Ireland’s.
A Government spokesman said that Hong Kong’s economic growth has moderated progressively since last year amid a slowing global economy and US-Mainland trade tensions. The situation showed an abrupt deterioration recently due to the severe impacts of the local social incidents. According to the advance estimates, GDP contracted by 2.9% in real terms in the third quarter of 2019 from a year earlier, marking the first year-on-year contraction for an individual quarter since the Great Recession of 2009, and also much weaker than the mild growth of 0.6% and 0.4% in the first and second quarters respectively. For the first three quarters as a whole, the economy contracted by 0.7% over a year earlier. On a seasonally adjusted quarter-to-quarter comparison, the fall in real GDP widened to 3.2% in the third quarter from 0.5% in the preceding quarter, indicating that the Hong Kong economy has entered a technical recession.
While it is not clear what the drag will be on the Chinese economy, it cannot be good. Economists forecast China’s GDP growth could be as low as 6% next year, the lowest level in decades. The primary cause of this is the trade war between the United States and China, the effects of which, for the time being, appear to have hurt the Chinese economy more than that of the United States. American GDP expansion continues to be improved due to strong consumer spending, low unemployment and low-interest rates.
There are no reasons to believe Hong Kong’s economy will improve anytime soon.