Five months of protests, along with collateral damage from the US-China trade war, have caused two successive quarters of contraction in the city-state.
“The blow to our economy is comprehensive,” Hong Kong’s financial secretary Paul Chan wrote on his personal blog.
“It seems that it is extremely difficult to achieve the forecast of 0 to 1% of the annual economic growth. It is impossible to rule out the possibility that the economy will experience negative growth throughout the year.”
The tourism industry has taken its worst hit since the SARS outbreak in 2003, with hotel occupancy falling to 66 per cent and a 37 per cent decrease in tourism numbers since the start of protests.
“In terms of retail sales, some shops have reported that they have been forced to suspend business for half a day or even all day in the past few months,” Mr Chan wrote.
“Workers are also worried about personal safety and traffic arrangements.”
The protests are just one of the problems affecting the region, with the US-China trade war also contributing to the city-state’s economic strife.
“Hong Kong is particularly reliant on import and export trade, transportation and logistics industries,” Moody’s analyst Xiao Chun Xu told Investor Daily.
“Elsewhere in the region exports and domestic economic growth have been disappointing in South Korea, Japan and Singapore since the second half of last year. This strong co-movement across Asia is consistent with the notion that production processes are interlinked and that the US-China trade war impact is flowing through to the entire region.”
Mr Chan wrote that the government will continue to monitor both the internal and external economic situation in Hong Kong, but warned that the government could only slightly reduce the pressure on industry and the public.
Mr Chan urged for the public to work together to put an end to the violence that has raged since the introduction of an extradition bill that would allow China to extradite Hong Kong citizens to the mainland.
