Economic system shrinks 4 % within the January-to-March interval from a yr earlier, in keeping with advance estimates.
Hong Kong’s financial system contracted final quarter for the primary time in additional than a yr as native restrictions to curb Covid hit exercise and China’s personal omicron outbreak disrupted commerce.
Gross home product fell 4% within the January-to-March interval from a yr earlier, in keeping with advance estimates launched by the federal government on Tuesday. The quantity — Hong Kong’s first because the finish of 2020 — was far worse than a median estimate of a 1.3% contraction in a Bloomberg survey. It was additionally the largest contraction because the third quarter of 2020.
Town confronted “immense stress” within the first quarter of 2022, a authorities spokesperson was quoted as saying in a launch from the Census and Statistics Division accompanying the information. Town’s fifth coronavirus wave, together with moderating world demand progress and “epidemic-induced cross boundary transportation disruptions,” all dragged on the financial system, the particular person stated.
Forward of the information, there have been indicators of deep financial injury within the first three months of the yr, with retail gross sales collapsing greater than 14% in February and exports plunging 8.9% in March. Town imposed strict social restrictions through the quarter — together with a ban on dining-in after 6 p.m. and shutting gyms and sweetness salons — to battle a coronavirus wave that killed hundreds and contaminated greater than 1 million folks.
“This reveals how non-public consumption, retail gross sales and the pandemic in China have hit progress,” stated Samuel Tse, an economist at DBS Group Holdings Ltd in Hong Kong. Tse had forecast a 1.2% contraction due to a low base of comparability with the primary quarter of final yr.
The Asian finance hub is now slowly beginning to reopen, which means the first-quarter stoop might mark the low level within the progress cycle. On Tuesday, the government accelerated reopening plans, and will on Thursday allow eight people to eat together, up from four previously, together with different easing measures. Two weeks later, dining-in hours will likely be prolonged from 10 p.m. till midnight, Chief Government Carrie Lam stated at a briefing.
Nonetheless, a lot will depend upon China’s personal outbreak and Covid controls, which have made it tough to move items to and from the mainland. Exports from Hong Kong to China dropped 12.8% in March from a yr in the past, in keeping with official figures.
Commerce disruptions from China and weak exterior demand might linger for at the very least the subsequent month, Tse stated, including that he expects one other contraction within the second quarter.