Hong Kong slashed its economic outlook for the current year on Friday and warned that a recovery of the economy from a recession will depend on the time that the city will take to bring under control a fresh wave of infections of the novel coronavirus.
Its full year gross domestic product (GDP) forecast was revised to a contraction of between 6 per cent and 8 pr cent compared to its previous forecast of a contraction of between 4 per cent and 7 per cent, said the Chinese territory’s government.
In the second quarter, the Hong Kong economy shrank by 9 per cent marking the fourth straight quarter of year-on-year decline for the city that is also known as the financial hum of Asia. The second quarter contraction was in line with advance estimates released by the government and was slightly better than the 9.1 per cent contraction that the it had reported in the first quarter.
“Hong Kong’s short-term economic outlook is still highly uncertain,” government economist Andrew Au said in a statement.
“The recent surge of COVID-19 infections and the resultant tightening of social distancing measures, and austere labour market conditions will weigh heavily on private consumption in the coming weeks,” Au said and added that how fast local infections can be brought under control will decide a recovery for the economy.
During the second quarter, and particularly in the months of May and June when the novel coronavirus pandemic was largely under control, there had been a stabilization of the overall economic situation. But the economy is expected to see more damage with a resurgence in the number of cases recently.
“If the current wave of local infections can be contained within a short time and barring any further sharp deterioration in the external environment, economic performance for 2020 as a whole can hopefully fall within the upper half of the range forecast,” Au added.
The total number of infections in Hong Kong touched more than 4,300 with 48 new coronavirus infection cases being reported from the city on Friday.
For the April-June period, there was a seasonally adjusted contraction of 0.1 per cent in the economy on a quarterly basis after a revised 5.5 per cent contraction in the first quarter.
The consumer and tourism-related sectors are the ones that are worst hit by the resurgence of infections.
The rate of joblessness of the city reached its highest in more than 15 years. There was laos a drop of 99.7 per cent in the arrivals of visitors to the city in June.
Retail sales and restaurant receipts are also expected to shrink further.
“With Hong Kong currently experiencing the third wave of the pandemic, we can see no improving signs in the near term…or what kind of recovery can be expected in the intermediate term,” Lifestyle International , the operator of Sogo department stores, said after it reported a first-half net loss.
(Adapted from News18.com)