Hong Kong’s economy contracted for the first time in a decade in 2019 amid anti-government protests in the city and a trade conflict between the United States and China.
Hong Kong’s GDP in October-December, seasonally adjusted, fell 0.4% from the previous quarter. According to revised data, the economy contracted by 3% in July-September.
In annual terms, the economy contracted in October-December by 2.9% compared with the revised drop of 2.8% in the III quarter.
For the whole of 2019, real GDP fell by 1.2%, which was the first annual decline since 2009.
In June, mass demonstrations began in Hong Kong because of the extradition bill, which grew into wider anti-government protests. After large-scale protests, Hong Kong authorities made concessions, and in early October, the bill was completely withdrawn. However, the protests did not stop, they became small, but more fierce. Over half a year, over 900 demonstrations, marches, and protests took place in Hong Kong.
More than 80 people whom the Hong Kong authorities suspect of participating in riots, attacks and storming the Legislative Assembly during large-scale demonstrations have left the special administrative region of the PRC and took refuge in Taiwan.
During the protests, tourism, retail and hotel business in Hong Kong were particularly affected. The number of tourists visiting the city in November fell by 55.9% year-on-year, the fastest since May 2003, when the city suffered from an outbreak of Severe Acute Respiratory Syndrome (SARS).
The political crisis exacerbated the economic pressure that Hong Kong had already experienced amid a trade war between the US and China and a slowdown in the growth of the Chinese economy.
According to the latest available data, retail sales in November fell for the 10th consecutive month shrunk by 23.6% in annual terms.
The outbreak of a new type of coronavirus in China poses an additional threat to the Hong Kong economy.
Hong Kong has taken measures to reduce the flow of arrivals from mainland China. Meanwhile, the city’s retail and tourism sector is heavily dependent on Chinese tourists.