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After two months of crisis between pro-democracy protesters and Chinese authorities, the Hong Kong economy is slowing down. In the first quarter, it decreased by 0.6%. Never observed for ten years, the situation has led the local authorities to act.
The Hong Kong government has just presented a two billion euro emergency plan to support purchasing power. The plan includes support for small businesses, students and low-income households.
The political crisis is weighing on the economy of the territory, which has also suffered for several months, trade tensions between China and the United States. More than 45% of its trade depends, in fact, Beijing.
Tourism in decline
As a result, investors are turning away from the territory. Hong Kong's central role in the IPO of Chinese companies has seen heavy losses since early June. Li Ka-Shing, the richest man in Hong Kong alone, lost more than three billion dollars.
The tourism sector is also beginning to account for its losses. Bookings for August and September have dropped by 50%, and cancellations are increasing. The fall of arrivals in Hong Kong has affected the airline Cathay Pacific which had to cancel many flights due to a general strike.
Growth stalled
Other sectors such as commercial real estate and retail should soon be affected by the crisis. The traders already note a very sharp drop in consumption. Tourists like Hong Kong do not buy anything because shopping centers are closed.
As a result, the government is increasingly pessimistic about its growth. The head of the Hong Kong executive, Carrie Lam, has even said that the economic impact could be worse than that of the outbreak of SARS (Severe Acute Respiratory Syndrome) in 2003. The government has revised downward its forecasts growth. It now provides a small 1%. We are far from the 3% expected at the beginning of the year.