Hong Kong GDP Remains In Deep Recession
Hong Kong’s economy contracted for the fourth straight quarter with the coronavirus pandemic weighing on household spending and investment and exports in the second quarter, official data revealed Wednesday.
Gross domestic product decreased 9 percent year-on-year after a 9.1 percent slump in the first three months of the year, according to advance estimates from the Census and Statistics Department. The economy has now shrunk for four consecutive quarters.
The latest decline of GDP was mainly attributable to the continued weak performance in both domestic and external demand, the statistical office said.
Compared to the previous quarter, GDP fell a seasonally adjusted 0.1 percent in the second quarter.
The economy stabilized last quarter as fiscal stimulus and stronger demand in mainland China offset weaker consumption and investment, Julian Evans-Pritchard, an economist at Capital Economics, said. But with the city facing its worst Covid-19 outbreak yet, hopes for an imminent recovery have been dashed.
The expenditure-side breakdown of GDP showed that private consumption expenditure shrank 14.5 percent from a year earlier, deteriorating from the 10.6 percent decline in the first quarter.
Meanwhile, growth in government consumption accelerated to 9.6 percent from 8.8 percent in the first quarter. On the other hand, gross domestic fixed capital formation decreased 20.6 percent versus a 15.8 percent fall a quarter ago.
Total exports of goods logged an annual decline of 2.1 percent and imports of goods dropped 6.8 percent.
At the same time, exports of services fell significantly by 46.6 percent and imports of services were down 43.5 percent.
Looking ahead, the Covid-19 pandemic will remain a key threat to the global economic outlook, government spokesman said. The challenging external environment will likely constrain Hong Kong’s export performance in the near term.
Locally, the recent surge in Covid-19 cases has clouded the near-term outlook for domestic economic activity, the spokesman added.