Hong Kong GDP contracts amid unrest

Bloomberg

Hong Kong suffered a day of tempestuous weather, grim economic news and signs that the city’s political crisis is deepening.
Gross domestic product contracted 0.3 percent from the previous quarter, while growth on a year-ago basis remained at 0.6 percent, according to data. Both results were well below the estimates of economists surveyed by Bloomberg.
Hong Kong’s trade-dependent economy was facing a full-year deceleration even before protests over the government’s extradition bill began disrupting business and tourism in June. The data release came after the city’s financial markets shut early due to a typhoon, and amid signs that the government is taking a harsher line in punishing protesters. “The trade war is hurting Hong Kong,” said Iris Pang, an economist with ING Bank NV in Hong Kong.
“At the same time, into the second half of 2019, we will have protests also damaging the Hong Kong economy through consumption and the job market. It means that we are doubly hit.”
Embattled Chief Executive Carrie Lam addressed international and local chambers of commerce. She said that the territory’s economic momentum has weakened in recent months on the US-China trade war and other “uncertainties,” according to a statement, while pledging to “spare no efforts” to deal with anti-government protests that risk harming the city’s growth.
There is “no room for optimism for the second quarter and the entire year,” she said.
“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 from the city’s government that reported her comments. “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 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.
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,” Tara Joseph, the president of the association of US companies in the city, said in a press release.
A tropical storm shut Hong Kong’s financial markets for the first time in almost two years, adding extra drama to a city that’s been wracked by protests for weeks.
The Hong Kong Observatory raised the storm signal on Wednesday, the third highest level on its scale. That prompted the city’s stock exchange to suspend trading 15 minutes later, as required by its rules.