Lewis Bentley Group says escalating trade tensions and ongoing pro-democracy protests could send Hong Kong’s economy into recession.
As massive protests and widespread political turmoil have raged in Hong Kong in recent months, the country’s core industries have been dealt a harsh blow. Lewis Bentley Group analysts reported that Hong Kong’s tourism, retail and employment sectors were all feeling the consequences of the protests that the government has not been able to suppress.
With tourist numbers down by 30 percent, hotel prices being reduced dramatically and retail sales set to fall by as much as 10 percent this year, Lewis Bentley Group analysts are warning that Hong Kong’s economy could be facing a serious downturn.
Last week the Hong Kong government announced that it would implement a stimulus package to the value of $2.4 billion to help protect employment and ease the population’s growing financial burdens. Lewis Bentley Group analysts say the sizeable stimulus which includes tax cuts, school subsidies and extra social security payments may not be enough.
Even though Hong Kong is spending billions of dollars to try and avoid a recession, Hong Kong’s economy grew by just 0.6% during the period from April to June this year. This was the slowest pace of growth seen in 10 years.
Lewis Bentley Group analysts say pro-democracy protests which have been taking place for eleven straight weeks have had a significant impact on Hong Kong’s economy which was already faltering under the weight of escalating trade tensions between the US and China.
Hong Kong’s government has already reduced its GDP growth forecasts for this year from the original range of 2 -3 percent down to 0-1%.