Hong Kong ends longest recession in decades

HONG KONG: Hong Kong’s economy jumped back into growth in the first quarter of the year, official figures showed on Monday (May 3), ending the city’s most pronounced period of recession in its modern history.

The international financial hub has been battered in the last 18 months by a triple whammy of the United States-China trade war, months of social unrest and then the COVID-19 pandemic.

It recorded six consecutive quarters of negative growth, a more prolonged downturn than during both the 1997 Asian financial crisis and the 2007 to 2008 global crash.

That came to an end on Monday when the government announced that the city’s economy grew by 7.8 per cent on year in the first three months of 2021.

Hong Kong was one of the few places in the world unlucky enough to enter the coronavirus pandemic already mired in a deep recession.

In 2019, months of huge and often violent protests coincided with swirling trade tensions between Beijing and the US, pummelling the economy that acts as an international gateway to China.

The city was among the first places outside mainland China to record a COVID-19 infection, and the economy plunged by a record-breaking 9.1 per cent in the first quarter of 2020.

Since then, Hong Kong has managed to keep the virus’ spread down to a little more than 11,000 infections thanks to strict quarantine and economically punishing social distancing measures.

READ: Residents vaccinated against COVID-19 ready to party till 2am as bars reopen in Hong Kong

READ: Asia-focused HSBC profits double as credit losses reversed

This year’s economic rebound was largely sparked by a sharp resurgence in exports fuelled by recoveries in both China and the US.

Financial Secretary Paul Chan has forecast full-year growth of 3.5 to 5.5 per cent in 2021.

But the city has warned that the economy remains below its pre-pandemic levels and that the recovery will be uneven.

Coronavirus restrictions are keeping Hong Kong all but closed to those without work permits, and people who do arrive need to undergo three weeks of compulsory hotel quarantine.

The tourism and retail sectors remain on their knees, and unemployment is at around 7 per cent, its highest rate in years.

While political stability has returned, an ongoing crackdown on dissent and moves to make semi-autonomous Hong Kong more like the mainland continue to rattle business confidence.

A quick journey out of the pandemic looks unlikely as well.

The city has managed to secure ample doses of coronavirus vaccines, but many residents are hesitant to listen to a government that suffers from a palpable trust deficit.

So far, just 12 per cent of the city’s 7.5 million residents have taken one or more vaccine doses.

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