Asia Minute: Hong Kong’s Economy Stumbles Further
Protests in Hong Kong are continuing this week. Although they’ve been smaller in scale and more peaceful than in recent weeks. But the economy continues to sputter, and city officials are spending more money to try to improve the situation.
Hong Kong’s economy is bleeding.
This week the government said retail sales in October plunged by more than 24% compared to a year earlier. That’s the biggest decline on record.
Market information specialist IHS Markit reported on Wednesday that business activity last month contracted at its fastest pace in 21 years.
The same day, Hong Kong’s Financial Secretary announced more than half a billion U.S. dollars in emergency financial aid aimed at small and medium-sized businesses. That brings the total amount of recent government spending on the economy to about 3.2 billion U.S. dollars — but the International Monetary Fund says that’s not enough.
The IMF expects Hong Kong’s economy to shrink by more than a full percentage point this year, and return to slow growth of 1% next year.
Hong Kong is already in its first recession in a decade — and the economy remains vulnerable to a further downturn in tourism.
The corporate distributor behind luxury brands from Christian Dior to Versace has called on local shopping malls to make major cuts to their rents.
The Bluebell Group warns that a continuing drop in visitor spending will push many retailers out of business.