Hong Kong recession to continue as protests hit economy – business liv…

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A protester during a rally at Edinburgh Place in the Central District in Hong Kong yesterday

A protester during a rally at Edinburgh Place in the Central District in Hong Kong yesterday Photograph: Vivek Prakash/EPA

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

The final week of the year is a time for taking stock, and looking ahead. But for Hong Kong, that means bracing for a longer downturn.

The city’s finance chief has warned that the economy has contracted in the last quarter of 2019, dragging it even deeper into recession.

Finance Secretary Paul Chan said the protests that have gripped Hong Kong for months – and become increasingly violent – has hurt its economy badly.

In a blog post, Chan warned:


“Based on the situation of these few months, it is inevitable that negative growth will continue.

This means the government will be less flexible in using financial resources under an economic recession.”

Hong Kong officially slumped into recession in the third quarter of this year, with GDP contracting by an alarming 3.2% in July-September. Retail spending has suffered a major contraction, as the sight of demonstrators clashing with riot police has deterred tourists from visiting.

This has had a knock-on impact on companies across the world, from airlines such as Cathay Pacific to Europe’s luxury goods producers.

Visitor arrivals from China fell a record 46% in October to slightly more than 2.5 million, less than half of the record set in January. The most recent data for retail sales in Hong Kong showed a 24.3% plunge, the biggest ever, according to Gulf News.

Chan says this downturn has a serious impact on the government’s finances:


“This will leave the government with its first budget deficit in the past 15 years.

The protests have dropped out of the headlines recently, after the authorities ended a siege at Hong Kong Polytechnic University. But the pro-democracy movement hasn’t gone away; thousands took part in a protest yesterday.

The movement plans to begin the new year with a large demonstration on Wednesday, renewing their demands for an amnesty for arrested protesters, an independent inquiry into alleged police brutality, and complete universal suffrage for the City.

Also coming up today

The economic calendar is pretty bare, beyond some UK mortgage approvals figures and US trade data.

European stock markets are expected to dip a little this morning, with the FTSE 100 dipping by 13 points or 0.2% in early trading.

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European Opening Calls:#FTSE 7631 -0.18%#DAX 13297 -0.30%#CAC 6028 -0.15%#AEX 610 -0.24%#MIB 23697 -0.25%#IBEX 9685 -0.16%#STOXX 3777 -0.15%


December 30, 2019

The agenda

  • 9.30am GMT: UK home loan approvals data for November: expected to dip to 41200, from 41219
  • 1.30pm GMT: US trade balance for November; expected to widen to -$68.8bn, from -$66.5bn



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