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Hong Kong economy shrinks in Q2 on political turmoil

Hong Kong economy shrinks in Q2 on political turmoil

Mubasher: Hong Kong is on the brink of its first recession since a decade, against a backdrop of growing violent anti-government protests which took a heavy toll on tourism and retail sales.

Hong Kong’s economy contracted 0.4% in the second quarter, from the prior quarter, revised government figures showed.

This came slightly lower than an initial reading of a contraction of 0.3%, while it marked a sharp slowdown from a 1.3% growth in the first quarter.

In technical terms, a recession is two successive quarters of contraction.

On an annualised basis, Hong Kong economy grew by 0.5% in the period between April and June, the slowest pace since the 2009 global financial crisis, while it come lower from a preliminary reading of 0.6% and the preceding three-month period’s 0.6%.

“Domestic demand remained the key source of growth, [whereas] external demand was still lacklustre, with goods exports expanding only marginally and with services exports, being dragged by the slowdown in inbound tourism, slackening further the government said.

Conditions have taken a sharp downward turn since the eruption of demonstrations in protest to a proposed bill that would have allowed the extradition of suspects from Hong Kong to mainland China.

The political unrest has led to the closure of the airport at one point, and major shopping areas.

The Asian economy has been already feeling the heat from the flaring trade conflict between the US and China.

The Hong Kong government re-affirmed that it was downgrading its full-year growth outlook to a range of between 0% and 1%, from the prior range of between 2% and 3%, after unveiling a modest economic support package.