Hong Kong confirmed on Monday it plunged into recession in 2019, suffering its first annual contraction in a decade as the city buckled under the twin pressures of the US-China trade war and months of furious pro-democracy protests.
The data was released as the semi-autonomous city begins the lunar New Year facing another economic crisis — the outbreak of a deadly new coronavirus strain which began on the Chinese mainland and is compounding Hong Kong’s economic woes.
Last year was the worst for Hong Kong’s growth since 2009, when the financial hub was hit hard by the global financial crash.
The crisis was initially sparked by the trade war between Beijing and Washington, hitting the export-heavy economy.
But the hard times were made worse by months of seething and often violent protests seeking greater democracy and police accountability.
Official figures released on Monday showed Hong Kong’s gross domestic product shrank 1.2 percent on-year for 2019.
The fourth quarter — which witnessed the worst violence between police and protesters — clocked a 2.9 percent contraction, the third straight quarter of declines.
‘The local social incidents with violence during the quarter took a further heavy toll on economic sentiment as well as consumption and tourism related activities,’ the government said in a statement.
‘Total exports of goods continued to decline amid the difficult external environment, though at a somewhat narrower rate,’ it added.
Clashes between protesters hurling bricks and petrol bombs and police wielding tear gas and rubber bullets became a weekly occurrence for nearly six months last year.
The protests have died down in frequency and ferocity in the last two months, but the underlying cause has not gone away.
Hong Kongers are rattled by the feeling that an increasingly assertive Beijing is clamping down on their city’s freedoms.
The protests were first sparked by a proposal to allow extraditions to the mainland and its opaque, Communist Party-controlled legal system.
But they soon morphed into a popular revolt against Beijing’s rule.
The extradition bill was eventually killed off after months of unrest, but the movement has achieved few of its other demands, which include an inquiry into the police, an amnesty for those arrested and fully free elections.
Economists see little reason for cheer in the months ahead.
‘The coronavirus outbreak will probably keep the city in recession for a while longer,’ Capital Economics wrote in a note to clients after the GDP figures were released.
‘The virus outbreak will certainly dampen any green shoots,’ added Raymond Yeung at ANZ. ‘We will see a bigger negative in the first quarter (of 2020).’
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