(Fighting against New Coronary Pneumonia) In the first quarter, the GDP and Exchange Fund both fell below historical records. Three questions: Where is Hong Kong's economic path?
China News Agency, Hong Kong, May 4 Question: The GDP and Exchange Funds of the first quarter both fell below historical records. Three questions: Where is Hong Kong's economic path?
China News Agency reporter Liu Chenyao
The Census and Statistics Department of the Hong Kong Special Administrative Region released the news on the 4th. In 2020, Hong Kong ’s first quarter gross domestic product (GDP) fell in real terms by 8.9% year-on-year, the largest decline since a record in 1974. On the same day, the Hong Kong Monetary Authority (HKMA) announced that the Exchange Fund's investment loss in the first quarter was 86.1 billion yuan (HK $, the same below), which was also the largest single-quarter loss since record. Hong Kong's "Financial Lord"-Financial Secretary Chen Maobo bluntly told the media that the Hong Kong economy fell into a deep recession.
What is the concept of "deep recession"?
"The Hong Kong economy contracted by 8.9% year-on-year in the first quarter, and the decline was more than that of the two financial storms from 1997 to 1998 and 2008 to 2009, and it was the largest decline since record." ICBC International Chief Economist, Director General Manager Cheng Shi said in an exclusive interview with a reporter from China News Service that the above data reflects the unprecedented blow to the Hong Kong economy since the new crown epidemic broke out in mid-January and evolved into a pandemic.
Data released that day showed that Hong Kong's GDP fell by 8.9% year-on-year in real terms in the first quarter of 2020 and contracted by 5.3% quarter-to-quarter after seasonal adjustment. The largest decline was in service exports, which fell 37.8% year-on-year in real terms. It was related to the stagnation of the tourism industry. Consumption and investment also contracted significantly, with real-year declines of 10.2% and 13.9% respectively. In the "May Day" holiday just passed, the tour groups going to Hong Kong even returned to zero, and the related industries bleakly operated.
In the words of Chen Maobo, under the influence of the Sino-U.S. Trade friction that began two years ago, social events and violent shocks last year, and the recent new type of pneumonia epidemic, "the three carriages of our economy-exports, consumption and investment , Three carriages can be said to be "dead fire".
At the same time, the unemployment rate in Hong Kong rose to 4.2% in March, the highest in more than nine years. The deterioration of the job market, in the view of E Zhihuan, the chief economist of BOC Hong Kong, together with the epidemic situation, the adjustment of the financial market, and the economic outlook, have caused an impact on the economy of Hong Kong in the first quarter.
Will the Pearl of the Orient collapse?
Even though several major economic data are consistently down, in the industry's view, Hong Kong's economic outlook is not completely pessimistic.
E Zhihuan believes that Hong Kong's economy is facing a difficult situation and may have a negative impact on the asset market. However, in response to the economic problems caused by the epidemic, major central banks in the world implemented ultra-loose monetary policies. The HKMA has also introduced a number of measures to ensure that the banking system has sufficient liquidity, maintain the stability of the financial system, and avoid a blow to the economy. The SAR Government has launched multiple rounds of measures to ride out the difficult times with the public, reaching a scale of about 10% of GDP, in order to promote the recovery of the Hong Kong economy after the epidemic is under control.
Cheng Shi also said that the epidemic situation in the Mainland and Hong Kong has eased recently, and the epidemic situation control measures are expected to be gradually relaxed, which will help to slightly stimulate local consumer sentiment.
Judging from Chen Maobo ’s forecast for the 2020 full-year GDP decline of 4% to 7% announced on April 29, there is also room for economic recovery in the second half of the year.
What problems still need to be overcome to revive Xiangjiang?
"At present, the biggest challenge facing Hong Kong's economy is the rapid spread of the new crown epidemic in the world and the resulting global economic downturn." E Zhihuan believes that the continuation of the epidemic and related control measures have largely restricted the recovery of economic activities space. In April, the International Monetary Fund lowered its forecast for global economic growth this year to its lowest level since its record in 1980, shrinking by about 3%. Under the global economic recession, Hong Kong, as a small open economy, is also difficult to optimistic about its prospects.
Cheng Shi was concerned that the impact of the epidemic on the economy has not been fully reflected, tourism consumption will not recover in the short term, the collapse of enterprises and shops will continue, and the unemployment rate will inevitably rise further, which will suppress the rebound in consumer sentiment. . At the same time, global protectionism is heating up, the global economy is also in a serious recession crisis, and investment sentiment will remain depressed.
In the view of the above experts, the continued social movement is another hidden concern for Hong Kong's economic prospects. Cheng Shi told reporters that before the outbreak, the Hong Kong economy has experienced two consecutive quarters of contraction in the second half of last year. If society continues to be unstable, even if the impact of the epidemic subsides, the Hong Kong economy will still face great uncertainty.
"In Hong Kong at this moment, human harmony is more important than time and place. If the global epidemic can be controlled later, our economy is expected to gradually come out of the bottom in the second half of the year." Chen Maobo said on the 4th in the face of major Hong Kong media reporters. (Finish)