On July 31, the Census and Statistics Department (C&SD) announced Hong Kong economic data for the second quarter of 2019.
The government statistics recorded a significant decline in both private investment and total exports volume.
Meanwhile, gross domestic fixed capital formation was down by 12.1 percent in the second quarter compared to the same period last year.
The drop has accelerated compared to just 7 percent in the first quarter this year.
As far as goods exports volume is concerned, the decline expanded to 5.4 percent from a year ago, compared with a 3.7 percent decrease in the first quarter.
Goods imports volume was down 7 percent in the second quarter; it was only down 4.2 percent in the first quarter.
With regard to service exports volume, the growth was down from 0.8 percent in the first quarter this year to 0.2 percent in the second quarter.
Seasonally adjusted, our second-quarter GDP is actually down 0.3 percent compared to the first quarter.
Financial Secretary Paul Chan Mo-po has expressed through different channels that the Hong Kong economy is now facing a severe challenge and downturn pressure.
At a press conference last week, he said the anti-extradition bill movement over the last couple of months has taken a significant toll on the economy, citing some of the economic figures released by the C&SD.
He then went on to warn that if our GDP sees a further decline in the third quarter, then technically speaking, Hong Kong will be entering a recession.
In his official blog, Chan also said that the continued and violent clashes between protesters and the police have already led to mounting pressure on the retail sector, with some retail outlets now having to shut down at intervals due to shrinking sales volume.
True, it is undeniable that continuous mass demonstrations and protests will inevitably have implications for our society as a whole.
However, we must bear in mind that the main reason our social atmosphere is continuing to deteriorate is not mainly because of the anti-extradition bill protests, but rather, because of the July 21 attacks in Yuen Long against civilians, followed by the increasingly disproportionate use of force by the police against protesters across the city.
As a result of the police’s inaction toward the Yuen Long attackers and over-reaction to protesters and even passersby, there are now widespread doubts in society as to whether the police are still capable of enforcing the law impartially.
And such doubts have eventually led to a substantial decline in consumer spending because both business owners and our citizens have become increasingly worried about their own safety amid the tense social atmosphere.
When announcing the second-quarter economic data on July 31, the C&SD spokesperson explained that the main contributing factor to Hong Kong’s weak growth is the global economic slowdown resulting from the Sino-US trade war, which has dealt a severe blow to the manufacturing sector and trading activities across Asia.
Besides, as we can tell from the C&SD data, Hong Kong’s economy is now undergoing a continuous cyclical adjustment generated mainly by the external environment.
Simply put, there isn’t necessarily any direct correlation between the anti-extradition bill protests and our currently sluggish economy.
In my view, the financial secretary must have a good grasp of the true nature of the social turmoil, avoid making sweeping generalizations, and stop distorting economic data in an attempt to mislead the public.
I also believe that in times of political turbulence, the entire governance team of the administration must deeply reflect on how to rebuild international confidence in our city by responding to our citizens’ demands with concrete actions.
Any attempt by our officials to try to blame the social instability on protesters would only exacerbate tensions in society.
This article appeared in the Hong Kong Economic Journal on Aug 8
Translation by Alan Lee
[Chinese version 中文版]
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