Hong Kong ends longest recession in decades

HONG KONG • The Hong Kong economy jumped back into growth in the first quarter, official figures showed yesterday, ending the city's most pronounced period of recession in its modern history.

The international financial hub has been battered in the past two years by a triple whammy of the US-China trade war, months of social unrest and then the coronavirus pandemic. It recorded six consecutive quarters of negative growth, a more prolonged downturn than during both the 1997 Asian financial crisis and the 2007-08 global crash. That came to an end yesterday, when the government announced that the economy grew 7.8 per cent on year in the first three months of this year.

Hong Kong was one of the few places in the world unlucky enough to enter the coronavirus pandemic while it was already mired in a deep recession.

The city was among the first places outside mainland China to record a coronavirus infection, and the economy plunged by a record-breaking 9.1 per cent in the first quarter of last year.

Since then, Hong Kong has managed to keep the virus' spread down to a little more than 11,000 infections, thanks to strict quarantine and economically punishing social distancing measures.

This year's economic rebound was largely sparked by a sharp resurgence in exports fuelled by recoveries in both China and the United States.

Financial Secretary Paul Chan has forecast full-year growth of 3.5 per cent to 5.5 per cent for this year. But the city has warned that the economy remains below its pre-pandemic levels and the recovery will be uneven.

Coronavirus restrictions are keeping Hong Kong all but closed to those without work permits, and people who arrive need to undergo three weeks of compulsory hotel quarantine. The tourism and retail sectors remain on their knees, and unemployment is around 7 per cent, its highest rate in years.

"(It's) too early to talk about a full recovery of the Hong Kong economy from Covid," Ms Iris Pang, chief economist for Greater China at ING Bank, told Bloomberg News.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on May 04, 2021, with the headline 'Hong Kong ends longest recession in decades'. Subscribe