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Hong Kong has suffered its worst economic contraction on record, as a result of the global turmoil triggered by the Covid-19 pandemic.
With GDP shrinking by 8.9 per cent on an annualised basis, the territory’s Financial Secretary Paul Chan Mo-po stated: “Our economic situation is very challenging. We are in deep recession.”
The latest figures are a further blow to an economy already in recession. This third consecutive slump represented a 5.3 contraction in Hong Kong’s GDP on a quarter-to-quarter basis.
The territory was already struggling before the novel coronavirus outbreak, with the US-China trade war and popular pro-democracy protests hampering growth throughout 2019.
Having already experienced the SARS epidemic at the start of the century, Hong Kong’s government was better prepared to fight Covid-19 than many other countries. Despite being home to over 7.4 million people, there have been just 1,041 cases in the densely populated territory, with just four deaths.
As a result of the disruption to global supply chains, the widespread lockdowns and the increasingly sour relations between the United States and China, Hong Kong’s government now fears that the territory’s economy will shrink by 7 per cent. It added that exports will remain under “notable pressure” in the immediate future.
It is possible that Hong Kong’s economy has suffered a worse peacetime contraction in its history. However, quarterly records only began in 1974. Sir John Cowperthwaite, the man widely credited as turning the territory into a global financial centre from the 1960s onwards, distrusted GDP statistics as a useful aid in economic management.
When once asked how to help poorer countries improve growth, the veteran free trader stated: “They should abolish the office of national statistics.”
