HONG KONG: Hong Kong’s economy is set to contract in the fourth quarter as the city reels from six months of violent social unrest, the financial chief said Sunday.
“Based on the situation of these few months, it is inevitable that negative growth will continue,” Financial Secretary Paul Chan said in a blog post. “This means the government will be less flexible in using financial resources under an economic recession.”
The increasingly violent pro-democracy protests that started in June have undermined Hong Kong’s economy, discouraging tourists from visiting and slashing retail sales. Mainland Chinese visitors, who comprise the biggest group of tourists in the city, has plunged by almost half, while retail revenue has dropped by about a quarter during the demonstrations.
Chan said his budget speech to be delivered in February will focus on supporting business, safeguarding employment, reviving the economy and relieving social distress as the city also faces international turbulence such as protectionism and geopolitics.
The “core competitiveness” of Hong Kong’s financial market including the banking and securities system, the dollar peg and free flow of capital remain robust and orderly, Chan said.
Visitor arrivals from China fell a record 46% in October to slightly more than 2.5 million, less than half of the record set in January. The most recent data for retail sales in Hong Kong, once a mecca for shoppers, showed a 24.3% plunge, the biggest ever.
In a separate statement, Hong Kong’s Chief Secretary Matthew Cheung said the city’s institutional strengths such as the rule of law, clean government and a level playing field for businesses have remained strong and intact.
The government will broaden its channels of communications with the public, listening and responding more to people’s views and concerns in the coming year, he said.