Never-ending Hong Kong Protests might Lead to Economic Recession
Reaching its lowest in the past decade, the economy of Hong Kong is nearing recession because of the ongoing Hong Kong Protests and US-China trade war.
A recently conducted survey released on Wednesday highlighted that this has been the steepest deterioration in the health of the private sector since February 2009. It was added that the increasing pessimism had led the private sector slip even lower.
Further evidence of the effect of the Hong Kong protests on the overall economy revealed that in the seasonally-adjusted terms in July, tourist arrivals fell by 12 percent m/m. Besides the one month in 2015 that witnessed an unusually big low around the Chinese New Year, this was the biggest drop in 10 years.
The IHS Market Hong Kong purchasing managers index, which tracks the private sector activity in the Asian financial hub, dropped from 43.8 in the previous month to 40.8 in August. Since 2009 when the country faced a global slowdown because of financial crisis, this is the lowest recorded value.
The important industries which have suffered a major fall due to the ongoing Hong Kong protests include export trade and retail. Small scale businessmen have suffered largely because of the reduction in sales and revenue generation.
A government spokesperson commenting on the issue said, “Retail sales will likely stay weak in the near term, as growing U.S.-mainland trade tensions and subdued economic conditions continue to dampen consumer sentiment.”
According to the city’s Retail Management Association, most Hong Kong retailers have faced a sales drop of more than 50 percent in the month of August. The association has requested the landlords of the city to reduce the rents for six months by half.
Hong Kong’s richest man Li Ka-shing and many of the city’s biggest banks released full-page advertisements in local newspapers requesting the demonstrators to stop the marches and rallies. The billionaire, whose firm bought the British brewer Greene King for £2.7 billion, requested the nation to end the unrest “in the name of love” as the city has already been showing features of an upcoming recession.
Carrie Lam, Hong Kong leader, had compared the harm caused by the Hong Kong protests to the Sars epidemic of 2003. It was announced on Friday that in comparison to the previous year, the retail sales dropped by 11.4 percent in value in the month of July.
Days of discontent for Hong Kong began in June when more than a million people took to the streets to speak against an extradition bill that would give the suspects a chance for trial in China. If not controlled soon, the Hong Kong protests could bring in big time trouble for the economy.
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