Hong Kong pledges fresh aid of US$255 million to boost battered city
Hong Kong’s government has announced an extra allocation for the city battered by political unrest and facing its first recession in a decade. Massive and violent anti-government protests over the past five months have shaken Hong Kong’s reputation as an Asian financial centre and damaged its tourism and retail sectors, with many businesses forced to close. Financial Secretary Paul Chan announced relief measures of HK$2 billion to support the city’s economy, particularly in its transport, tourism and retail industries. “Since the economic situation is worsening quite fast, we rolled out this package to target certain sectors which are hard hit,” Chan told a news conference. Chan said more assistance would be given if needed.
Bloomberg had earlier reported that Hong Kong is facing its first recession since the global financial crisis, with little prospect of an immediate recovery. From luxury hotels and major shopping malls to neighbourhood stores and restaurants in tourist hubs, businesses are closing early or seeing fewer customers. The economy in Hong Kong contracted in the second quarter, almost certainly did so in the third quarter, and the data is still deteriorating. Once Asia’s manufacturing powerhouse, Hong Kong’s freewheeling consumer and finance-led economy is highly vulnerable to a collapse in confidence that has been delivered by the turmoil. “I do not expect to see any strong measures that can instantaneously turn things around,” said Mr Dong Chen, senior Asia economist with Pictet Wealth Management, one of a growing chorus of experts predicting Hong Kong had a second straight quarterly contraction in the three months through September. The effects of the United States-China trade war combined with a lack of tourist spending power also raises the prospect of a contraction for the full year, compared with 2018. The downturn has been rapid, as declining exports and protests have erased any economic momentum from the start of 2019. When Financial Secretary Paul Chan unveiled his budget in February, he forecast annual growth of 2 per cent to 3 per cent – by August, he had slashed that forecast to zero to 1 per cent.