The Hong Kong Special Administrative Region (HKSAR) has entered technical recession for the first time in 10 years, according to data released by the HKSAR government on Friday. The news follows months-long protests which have crippled the city and caused chaos on the streets.
The economy shrank by 3.2 percent in the July-September period compared to the previous quarter, dropping by 2.9 percent year on year. According to current affairs commentator Einar Tangen, the situation concerning the future of Hong Kong is more serious.
The city's tourism figures have also reportedly fallen by 40 percent since the protests started earlier this year in response to a now-withdrawn fugitive bill. Experts say people who work in sectors which are closely aligned to the tourism sector are likely to be the first victims of the economic pangs.
"What it [the recession] really impacts is Joe Bloggs on the street, those in the retail sector, in the hotel industry and in other industries which depend on tourism. Those industries employ a lot of people and nowadays the workforce has been gradually and significantly cut," said Lawrence Ma, chairman of the Hong Kong Legal Exchange Foundation.
Some economic analysts and commentators predict that Hong Kong may escape the worst impacts of the downturn owing to its unique advantages such as the territory's free capital outflow structure, legal framework, and simple tax system.
But Tangen disagreed: "There are always alternatives. Hong Kong was traditionally a safe place much like Singapore. If people don't live there [Hong Kong] they will take their businesses somewhere else. There are alternatives."
The central government in Beijing has been providing fiscal support to Hong Kong for some months but many predict Beijing is going to have to drastically increase its support for the territory to avoid a financial catastrophe.
"It's going to take a lot of effort from the (Chinese) mainland in order to prop up the Hong Kong economy over this period. I would disagree a little bit that the professions of finance and law are not going to be hurt by this. Many people I know are not holding their board meetings in Hong Kong," Tangen said.
With months-long protests showing no signs of dying down, the future of Hong Kong's economy remains uncertain. Even if the unrest was to come to an abrupt end, the damage to the economy will not be corrected anytime soon. Hong Kong is staring at a very serious recession coming its way in 2020, said Ma.
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