The economy of Hong Kong recorded its worst contraction in more than two years as the financial hub’s recovery was stymied by weak global demand, China’s continued Covid-19 curbs, and a slow reopening from years of pandemic isolation. Hong Kong’s economy recorded its worst contraction in more than two years as China’s continued Covid-19 curbs.
According to preliminary estimates that were issued by the government on Monday, the country’s gross domestic product saw a decline of 4.5 percent during the period of July to September when compared to the same time a year earlier.
This was a far poorer performance than the decrease of 0.8% that was predicted by economists, and it was even worse than the decline of 1.3% seen in the second quarter.
It was also the third quarter in a row that the economy shrunk, and the fall was the worst it had been since the second quarter of the year 2020.
The city’s economy has been under pressure for some months as a result of the global slump and trade difficulties with China as a result of limits on Covid-19 Zero. In addition, a talent migration has occurred as a result of almost two years of local viral restrictions and political unrest.
Because the local currency is pegged to the dollar, tightening monetary policy has also had a negative impact on the city’s economy. This is because the city has followed the United States Federal Reserve’s interest rate rises in recent years.
According to a statement that accompanied the report, a government official said that the decline was due to a deteriorating external environment, which included the aggressive rate hikes, as well as delays to cargo movements along the country’s border with China.
Although the decline in the third quarter was significant, much of it reflected activities that occurred before the city lifted its strictest restrictions over Covid-19, including the quarantine of hotels.
As the month of September came to a close, Hong Kong took the most significant action it has taken up to that point to increase the city’s competitiveness in light of the fact that the majority of the rest of the globe has begun to adapt its lifestyle to include living with the virus.
According to a statement issued by the ministry on Monday, a spokesperson said that the recently implemented easing of these procedures for incoming tourists “should enhance exports of services.”
In his policy address earlier in October, Chief Executive John Lee announced a slew of measures aimed at wooing back foreign talent and easing property pressures. Economists and investors, however, have stated that the proposals fell short of major policy reform and were not sufficient enough to meet their expectations.
Another source of tension is the deficit in the city’s budget, which, according to prior projections, might be three times as large this year.
And authorities admitted that global headwinds would continue to hamper the recovery for the economy, which might decline for the entire year for the third time since 2019 due to the effects of global headwinds.
According to a statement made by a government spokeswoman, “the dramatically worsening external climate will continue to exert great pressure on Hong Kong’s export performance in the remaining months of the year.”