Protests collapse Hong Kong's GDP and drag it into recession


The economy in Hong Kong's economy dropped 3.2 percent in the third quarter, a rise of 0.5 percent decline from the previous quarter. The readings were the weakest for the Asian financial hub since 2008/2009.

"In the absence of a political solution, an escalating cycle of violence seems most likely, whereby increased demonstrator aggression elicits greater use of force by the police and ever more aggressive attacks from protesters", said Steve Vickers, a risk consultant and a former commander of the Royal Hong Kong Police Criminal Intelligence Bureau.

The government also revised down second-quarter GDP data to 0.4 per cent year-on-year, from 0.6 per cent, and a contraction of 0.5 per cent quarter on quarter, versus 0.3 per cent previously.

Earlier this month the city's unelected pro-Beijing leader invoked colonial-era legislation for the first time in more than fifty years to outlaw face coverings at rallies.

"The main driver (of the GDP contraction) was a slump in private consumption as the protests shuttered stores, disrupted public transport and deterred tourists", Julian Evans-Pritchard, senior China economist of research firm Capital Economics, said in a research note.

As the trade war is expected to linger well into 2020, and there seems to be no end to the violent protests, for the time being, Hong Kong's economy will continue to suffer from negative quarterly growth going into 2020.

Police typically fire at protesters with tear gas and water cannon.

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China denies meddling, and has accused foreign governments of stirring up trouble, including the USA and Britain.

The economic debate now is focused on how long the downturn will last, if recent glimmers of stabilization point to a bottom, and if the US-China trade war and the demonstrations have done lasting damage.

The city's leader Carrie Lam warned on Tuesday that full-year growth could contract.

The protesters say Beijing's is interfering more and more in Hong Kong, which returned from British to Chinese rule under a "one country, two systems" formula meant to guarantee freedoms that mainland citizens do not have. Those plans follow on earlier initiatives, including the allocation of 2 billion Hong Kong dollars ($255 million) to support small companies and a 19 billion Hong Kong dollar ($2.4 billion) stimulus package to help safeguard jobs and provide relief to "people's financial burden".

Her administration has pledged around HK$21 billion ($2.7 billion) of financial aid for businesses since August, partly from rent and fuel subsidies. Mainland visitors still account for nearly 80 per cent of total arrivals in Hong Kong.

Lam's use of the law was controversial because it bypassed the Legislative Council, the partially-elected chamber that approves Hong Kong's laws.