After months of protests that have led to store closures and a dip in tourism, Hong Kong has entered its first recession in a decade.
The territory’s gross domestic product is down 3.2% for the third quarter compared to the second quarter, which registered an economic contraction of 0.5%, according to official government data released today. The quarter-over-quarter fall in real GDP means that Hong Kong has entered a recession for the first time since it shouldered the Great Recession of 2009.
A Hong Kong government spokesperson attributed the weakened economy to the ongoing protests.
“The [economic] situation showed an abrupt deterioration recently due to the severe impacts of the local social incidents,” read the statement. “Moreover, as the adverse impacts of the local social incidents have yet to show signs of abating, private consumption and investment sentiment will continue to be affected.”
Over the course of five months, Hong Kong residents have protested China’s attempts at further control over the semiautonomous territory, with protests against an extradition bill giving way to additional demands and rising tensions. Hong Kong tourism has slid 40% since August, according to data released earlier this month by the Hong Kong Tourism Board. That dip, experts suggest, is at least partially attributable to a decline in visitors from mainland China, many of whom have historically come to the island to shop high-end brands. What’s more, luxury is among the categories most impacted; analysts estimate that Hong Kong accounts for 5% to 10% of global sales in the luxury category.
“As the weakening economic conditions dampened consumer sentiment and large-scale demonstrations caused severe disruptions to the retail, catering and other consumption-related sectors, private consumption expenditure recorded its first year-on-year decline in more than 10 years. The fall in overall investment expenditure steepened amid sagging economic confidence,” the Hong Kong official elaborated.
Compared to Q3 2018, the GDP dropped by 2.9%, the first year-on-year dip since the Great Recession. For 2019, experts expect the Hong Kong economy to report negative growth, having experienced a year-on-year contraction of 0.7% through the first three quarters.
‘An Air of Anxiety and Sadness all Around’: Hong Kong Luxury Retailers Bemoan Immense Protest Impact
Here’s Why Some Hong Kong Consumers Are Calling for a Vans Boycott
As Protests Continue, Hong Kong Retail Market Looks Gloomy