Could we weather the deep recession that is likely to come?

March 06, 2020 18:24
A view of the once-bustling shopping district of Tsim Sha Tsui taken on Thursday. The average number of visitor arrivals in Hong Kong per day in mid-February stood at only 3,000, down 98 percent from the same period last year. Photo: HKEJ

Despite all the goodies the financial secretary offered in his latest budget, including the HK$10,000 cash handout, the response from the public was far from cheerful.

Even before the novel coronavirus outbreak, the city's income and employment outlook for 2020 was already grim following months of social unrest, with consumer confidence hitting an all-time low.

The Covid-19 epidemic has plunged Hong Kong deeper into gloom as far as the economic environment is concerned.

So for many citizens and business owners who are struggling to keep their heads above water amid the virus outbreak and the economic downturn, the HK$10,000 handout won’t make much difference.

Among the hardest-hit sectors are the catering and hotel industries.

According to figures released by the Hong Kong Tourism Board (HKTB), the average number of visitor arrivals in the city per day in mid-February stood at only 3,000, down 98 percent from the same period last year.

The overall hotel occupancy rate in the city was only 20 percent during the same period, with some high-end hotels recording single-digit check-in rates.

HKTB data indicates that the number of visitors to Hong Kong has already been on a downward trajectory since mid-2019 due to the anti-government protests.

A lot of mainland tourists with deep pockets were unwilling to come to our city amid escalating street violence.

Then it just got worse. Following the Covid-19 outbreak, the hostility shown by some Hongkongers towards mainlanders has run even deeper, further driving them away and wreaking havoc on the local tourism industry and related sectors.

According to media reports, at least 17 hotels across the territory have required employees to take no-pay leaves and four have begun laying off staff.

Travel agencies are also in dire straits. Mainland authorities have stopped issuing cross-border visas to travelers under the Individual Visit Scheme, and some of the most popular holiday destinations for Hongkongers such as Japan and South Korea are also badly hit by the epidemic.

Worse still, an increasing number of countries and regions have either issued travel warnings on Hong Kong or banned our citizens from entering their territory due to the coronavirus situation in our city.

On Thursday, Japan announced it was temporarily suspending a visa-waiver program for Hong Kong passport holders, starting next Monday.

Figures from the Census and Statistics Department (C&SD) also suggest that virtually all industries are suffering from the coronavirus outbreak, with the unemployment rate hitting a three-year high of 3.4 percent between November 2019 and January 2020, and the underemployment rate at 1.2 percent during the period.

The rapidly rising unemployment rate has raised a lot of issues.

To name a few, how are our graduates of tertiary institutions going to find jobs this year? What happens to the chefs and kitchen workers who have lost their jobs amid the rash of restaurant closures? What will be the employment prospects for hotel management graduates when many of our hotels are struggling with very low occupancy rates?

It is difficult to predict how worse the economy will get in the coming days.

For young people aged below 20, an economic meltdown is something that is alien to them. And this probably explains why many young people could defiantly chant during their protests, “If we burn, you burn with us!”

I wish I will be proven wrong, but judging from all the economic data available at this point, their slogan is likely to become a self-fulfilling prophecy.

This article appeared in the Hong Kong Economic Journal on Feb 29

Translation by Alan Lee with additional reporting

[Chinese version 中文版]

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Chairman of Wisdom Hong Kong