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HK sees further decline in economy this year due to Covid-19

14 August 2020

By The SUN
The recent surge in Covid-19 cases has further dimmed the outlook for HK this year 

The Hong Kong government says it expects to see a 6% to 8% decline in the economy for this year due to heavy blows from the coronavirus pandemic.

Government economist Andrew Au said the forecast was revised downward from the 4% to 7% projected in late April, when the economy showed signs of stabilizing after the local epidemic situation had improved.

But the combined impact of the record decline in the first half of the year, the difficult and uncertain economic environment in the second half, and the government’s massive relief measures to cushion the impact of the pandemic, made the downgrade inevitable.
“If the current wave of local infection can be contained within a short time and barring any further sharp deterioration in the external environment, economic performance for 2020 as a whole can hopefully fall within the upper half of the range forecast,” Au said.

He said that if the economy contracts this year, as it did in 2019, it would be the first back-to-back annual GDP drop (or two consecutive yearly decline) for Hong Kong since record-keeping began in 1961.

The grim figures highlighted Au’s mid-year economic report that the government released today, Aug 14, along with the revised second-quarter GDP figures.

The city’s gross domestic product slumped 9% in the second quarter from the same period last year, after a record decline of 9.1% in the first. Private consumption also fell by a record 14.2 percent.

But the rebound of China’s economy helped offset part of the downward pressures on exports of goods, the report said.

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Exports of financial services also grew moderately, thanks to active cross-border financial and fund-raising activities.

On the inflation outlook, the report said that with the impact of the surge in pork prices since May last year having largely dissipated, inflationary pressures will likely ease further for the rest of the year.

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Au said the government will continue to closely monitor the situation and roll out measures as necessary to maintain the vitality of the economy and pave the way for a speedy recovery once the threat of the pandemic recedes.

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