Hong Kong economy shrinks in 2019 amid protests, trade war

Hong Kong’s economy shrank last year for the first time since 2009, government data showed Monday, as the territory struggles with the impact of China’s virus outbreak.

The economy of the Chinese territory of 7 million people, a major trading and financial centre, contracted by 1.2% compared with 2018, the government said. That followed a 2.9% decline from a year earlier in the three months ending in December.

Hong Kong already was struggling with its first recession in a decade when China’s virus outbreak hit, prompting the territory and other governments to impose travel curbs that have disrupted business.

Trade was weak and protests that erupted in June over a proposed extradition law have depressed tourism and retailing.

The protests have been less intense and this year’s exports might rebound, but Hong Kong “isn’t out of the woods yet,” Julian Evans-Pritchard of Capital Economics said in a report.

“The coronavirus outbreak has appeared as a new headwind,” he said.

The government said earlier Hong Kong fell into recession after activity contracted by 2.8% in the three months ending in September. The government tried to shore up growth with tax cuts, higher social spending and other stimulus.

“The outlook for the Hong Kong economy in 2020 is subject to high uncertainties,” the government said in a statement.