Frances Ball 15 Nov 2019 11:12am

Hong Kong enters first recession in a decade

The territory has been gripped by pro-democracy protests for months, and the effect of tourists staying away has begun to show

Protests have taken over Hong Kong since June, when the territory’s then-chief executive Carrie Lam planned to pass an extradition agreement with mainland China.

Hong Kong is home to fund and wealth management assets worth more than $6trn (£4.7trn), according to Reuters.

The territory sank into recession for the first time in a decade, its government confirmed on Friday. GDP has contracted for a second consecutive quarter, a pattern which meets the technical definition of recession.

Hong Kong’s economy has been hit by both the protests, and also by the increasingly hostile trade war between China and the US.

A slowdown in economic progress in China has put pressure on the territory, compounding the effects of mass tourist cancellations and a loss of customers for the retail sector.

Retail sales in August were lowest on record, down 23% in a year. The government has put some stimulus measures in place, but given its need to keep a high level of reserves to back the Hong Kong dollar there is only limited help available.

Originally focused on the extradition bill, the protests in Hong Kong have expanded to a broader rebellion against Beijing’s influence in the territory, and police brutality.

In a statement, Hong Kong’s government said, “Domestic demand worsened significantly in the third quarter, as the local social incidents took a heavy toll on consumption-related activities and subdued economic prospects weighed on consumption and investment sentiment.

“Ending violence and restoring calm are pivotal to the recovery of the economy. The government will continue to closely monitor the situation and introduce measures as necessary to support enterprises and safeguard”, it added.