Hong Kong’s economic growth in the second quarter missed estimates as simmering unrest and the US-China trade war weighed on activity.
Gross domestic product contracted 0.3 per cent from the previous quarter, while growth on a year-ago basis remained at 0.6 per cent, according to data released on Wednesday. Both results were well below the estimates of economists surveyed by Bloomberg.
With the neighbouring Chinese economy slowing and global demand stuttering, Hong Kong’s trade-dependent economy was facing a full-year deceleration even before protests over the government’s extradition bill began to disrupt business and tourism in June.
There is “no room for optimism for the second quarter and the entire year”, according to a statement from Hong Kong’s government late on Tuesday that cited chief executive Carrie Lam’s remarks at a lunch for representatives of international and local chambers of commerce.
Mrs Lam said the territory’s economic momentum has weakened in recent months on the US-China trade war and other “uncertainties,” while pledging to “spare no efforts” to deal with anti-government protests that risk harming the city’s growth.
“Mrs Lam also said that the disputes in society in recent months are not conducive to Hong Kong’s continued development and that she would spare no efforts to deal with them,” according to the statement. “She pointed out that everyone should continue to have confidence in the city and she firmly believes that with the concerted efforts of various sectors, Hong Kong would find opportunities amid difficulties.”
Figures on Thursday may indicate retail sales dropped year-on-year for a fifth month in June, with demonstrations and the subsequent police crackdown deterring shopping and tourism.
“Carrie Lam says there is ‘no room for optimism’ on 2019 growth. We agree. Four important growth drivers for the former colony are exports, tourism, finance and property. On each of them, the signs are discouraging," said Tom Orlik, chief economist.
International companies are also feeling increasingly pessimistic about the city’s prospects, according to a survey of AmCham Hong Kong members.
“AmCham urges the government to stem any further damage and show clear leadership in meeting the expectations of Hong Kong people and in restoring the city’s international reputation for effective governance under the ‘one country, two systems’ framework,” AmCham president Tara Joseph said.
Small businesses in the city have also become much more pessimistic, with a sentiment index of small and medium companies dropping to the lowest in the seven years the survey has been conducted. The attitude of companies toward investment, sales, and profits all declined, as did all nine industry sub-indices, according to the results of the survey by Standard Chartered.