Financial system shrinks 4 p.c within the January-to-March interval from a 12 months earlier, in line with advance estimates.
Hong Kong’s financial system contracted final quarter for the primary time in additional than a 12 months 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 12 months earlier, in line 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 most important contraction because the third quarter of 2020.
Town confronted “immense strain” within the first quarter of 2022, a authorities spokesperson was quoted as saying in a launch from the Census and Statistics Division accompanying the info. Town’s fifth coronavirus wave, together with moderating international demand development and “epidemic-induced cross boundary transportation disruptions,” all dragged on the financial system, the particular person mentioned.
Forward of the info, there have been indicators of deep financial harm within the first three months of the 12 months, with retail gross sales collapsing greater than 14% in February and exports plunging 8.9% in March. Town imposed strict social restrictions throughout the quarter — together with a ban on dining-in after 6 p.m. and shutting gyms and wonder salons — to battle a coronavirus wave that killed hundreds and contaminated greater than 1 million folks.
“This reveals how personal consumption, retail gross sales and the pandemic in China have hit development,” mentioned 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 12 months.
The Asian finance hub is now slowly beginning to reopen, which means the first-quarter hunch might mark the low level within the development cycle. On Tuesday, the federal government accelerated reopening plans, and can on Thursday enable eight folks to eat collectively, up from 4 beforehand, together with different easing measures. Two weeks later, dining-in hours can be prolonged from 10 p.m. till midnight, Chief Government Carrie Lam mentioned at a briefing.
Nonetheless, a lot will rely on 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 12 months in the past, in line with official figures.
Commerce disruptions from China and weak exterior demand might linger for at the very least the subsequent month, Tse mentioned, including that he expects one other contraction within the second quarter.