HONG KONG (AFP) – 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 the last two years by a triple whammy of the US-China trade war, months of social unrest and then the coronavirus pandemic. It recorded six consecutive quarters of negative growth, a more prolonged downturn than during both the 1997 Asian financial crisis and the 2007-08 global crash.
That came to an end on Monday when the government announced the economy grew 7.8 per cent year 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 pro-democracy protests coincided with swirling trade tensions between Beijing and the United States, pummelling the economy that acts as an international gateway to China.
The city was among the first places outside mainland China to record a coronavirus infection, and the economy plunged by a record-breaking 9.1 per cent in the first quarter of last year.
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. 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 per cent to 5.5 per cent in 2021. But the city has warned that the economy remains below its pre-pandemic levels and 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 around seven percent, 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 authoritarian 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.
“(It’s) too early to talk about a full recovery of the Hong Kong economy from Covid-19,” Ms Iris Pang, chief economist for Greater China at ING Bank, told Bloomberg News.
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