Business

HK economy shrank for first time in a decade last year

HONG KONG : Hong Kong's economy contracted for the first time in a decade last year as violent anti-government protests and trade tariffs between Washington and Beijing took more steam out of the economy in the final quarter of last year.

But the worst may be yet to come, with no end in sight to the protests in the Chinese-ruled city and a new coronavirus outbreak in mainland China.

"The coronavirus outbreak will probably keep the city in recession for a while longer," said Mr Martin Rasmussen, China economist at Capital Economics.

Hong Kong, which has so far seen 15 confirmed cases of the virus, has taken measures to reduce the flow of visitors from China where the death toll has risen to 361. The city's retail and tourism sectors rely heavily on spenders from the Chinese mainland.

The economy shrank by a seasonally adjusted 0.4 per cent in October-December from the previous quarter, versus a revised 3 per cent contraction in July-September. On an annual basis, the economy shrank 2.9 per cent, compared with a revised 2.8 per cent fall in the third quarter.

For the whole of last year, real gross domestic product contracted by 1.2 per cent, the first annual decline since 2009.

Ms Iris Pang, Greater China economist at ING expects the economy to contract by 4.5 per cent this year and return to mild growth in 2021 "if the virus is contained". "Retail, catering, tourism, mass transportation are all suffering."

Capital Economics expects the virus to shave 2 per centage points off Hong Kong's first quarter growth.- REUTERS

BUSINESS & FINANCE