HK’s economic contraction eases amid Covid

HK’s economic contraction eases amid Covid
Hong Kong’s economic slump has eased considerably with new provisional figures showing that GDP declined by 3.4 percent in the third quarter compared with 9 percent drops in the two previous quarters, and an academic said the reopening of land borders could hold the key to a recovery.

According to government figures released on Friday, private consumption improved from a 14.2 percent decrease in the three months ending June to a 7.7 percent drop in the third quarter. Total exports, meanwhile, returned to growth, rising 3.8 percent year on year compared with a 2.2 percent slump in the second quarter.

A government spokesman said local economic performance improved, “having hit bottom in the second quarter”. It added that a stabilising Covid outbreak in Hong Kong and solid mainland economic growth also helped.

Simon Lee, a senior lecturer at the Chinese University Business School, called the latest figures “much better than expected”. He said the economy had been forecast to shrink by 6 to 7 percent.

“People may be getting used to the so-called Covid-19 environment. They tried to resume as many of the business activities as they can,” Lee said.

“Some businesses that originally cannot be conducted through the internet can now deliver food through electronic means, and then there may be some resumption of face-to-face activities due to the relaxation of the restrictions made by the government.”

While the government said it expects the local economy to continue to recover provided that local coronavirus infections remain at bay, Lee said much would depend on when Hong Kong’s border with Shenzhen and Macau will reopen.

He said a recent deal between the SAR and Singapore to set up a travel bubble was a good starting point, and that it could pave the way for similar agreements with some of our other neighbours such as Japan and South Korea.

The government spokesman, for his part, did point out that the tourism sector is “unlikely to see a swift rebound” because of the global travel restrictions in place.

On the Chief Executive’s bid to seek Beijing’s help to boost the local economy, Lee said politics should not get into the way on issues such as border reopening and the health code.

“Now there’s a lack of mutual trust between the Hong Kong government and the people in Hong Kong… Many political issues are involved in finalising the details,” he said.

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