Hong Kong has slipped back into a technical recession, new government figures showed on Monday, weighed down by rising interest rates, weakening global trade and the city’s continued adherence to strict coronavirus controls.
After a 3.9 percent year-on-year decline in the first quarter of 2022, the city’s GDP Monday reported another decline in the second quarter — albeit by a narrower range of 1.4 percent — according to preliminary estimates from the Census and Statistics Bureau.
The downturn reverses last year’s recovery, when the economy posted annual growth of 6.3 percent after slowing in 2019 and 2020 when the city was hit first by months of huge, sometimes violent, pro-democracy protests and then by the… Pandemic turned upside down.
The Hong Kong government said the economic improvement was less than expected due to the weak performance of foreign trade.
Official statistics released last month showed that the value of total exports of goods fell 4.2 percent in the second quarter compared to the previous quarter.
For the first half of 2022, an apparent trade deficit of $206.1 billion was recorded, which is 8.2 percent of the value of goods imports.
“Weakening global demand and continued disruptions in cross-border land freight flows between the mainland and Hong Kong have weighed heavily on Hong Kong’s exports,” the government said on Monday.
Monetary tightening by major central banks around the world is expected to significantly dampen global economic growth, while there is still no clear timeline for quarantine-free travel between Hong Kong and mainland China as Beijing strictly adheres to its zero-Covid policy holds.
The financial center’s new chairman, John Lee, said in an interview with the Hong Kong Economic Journal published Monday that his government would soon announce a further reduction in mandatory hotel quarantine for overseas arrivals.
“We connect to the world and to the mainland, we will do both and they don’t contradict each other,” Lee told the newspaper.
“I understand that one of Hong Kong’s competitiveness lies in its international connections.”
Pursuing China’s zero-Covid policy has largely cut Hong Kong off from the rest of the world for more than two years.
Some of the world’s toughest restrictions are still in place, including a week-long quarantine on arrivals and a ban on group gatherings of more than four people.
Local media recently reported that the government is considering resuming quarantine-free travel for overseas arrivals in November, when the city hopes to revitalize its international image with a financial summit and the Hong Kong Rugby Sevens.
#Hong #Kongs #economy #slipping #technical #recession
