HONG KONG - Hong Kong has entered a technical recession, after its economy contracted for two successive quarters following mass protests that have rocked the city for nearly five months, government data showed on Thursday (Oct 31).
Economic growth plunged 3.2 per cent in the third quarter of this year, after shrinking 0.4 per cent in the previous quarter, making it the worst slump since 2009 during the global financial crisis.
"Hong Kong's total exports of goods registered an enlarged decline in the third quarter, reflecting the further slackening of manufacturing and trading activities worldwide. With the local social incidents taking a heavy toll on inbound tourism, exports of services recorded the biggest year-on-year drop since the second quarter of 2003," the government said in a statement.
In 2003, the city was rocked by the Sars epidemic, which led to tourists staying away.
The government added that the situation is unlikely to improve in the near term.
"Moreover, as the adverse impacts of the local social incidents have yet to show signs of abating, private consumption and investment sentiment will continue to be affected," it said.
Protests had escalated in June over an extradition Bill that could see fugitives handed over to jurisdictions including mainland China. While the Bill has since been withdrawn, the increasingly violent protests have evolved into a visceral outpouring of anger against the authorities.
The protests, mostly on weekends, have kept tourists away, dealing a major blow to the financial hub.
In the aftermath of the 2003 Sars epidemic, Chinese tourists returned to Hong Kong but this year's protests have a distinctly anti-China tone.
There was a record of over 5.5 million visitor arrivals from China in January, but that plunged nearly by half by end-August. However, mainland visitors still make up nearly 80 per cent of total arrivals in the city.
Chief Executive Carrie Lam warned on Monday that the ongoing unrest could result in a full-blown recession by the end of the year, calling the situation "very grim".
Financial Secretary Paul Chan, who said the blow from the protest to Hong Kong's economy has been "comprehensive", added that it would be difficult to achieve the government's pre-protest forecast of 0-1 per cent annual economic growth.
The government last week announced relief measures of HK$2 billion (S$348 million), following a HK$19.1 billion package in August to support the economy.