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Hong Kong’s Economy Hit by Protests, Finance Secretary Chan Says

Hong Kong’s Economy Hit by Protests, Finance Secretary Chan Says

  • Unemployment rate likely to rise, Chan writes in blog post
  • Pressure on business to increase as protests continue: Chan
Paul Chan
Paul Chan Photographer: Paul Yeung/Bloomberg
Paul Chan
Photographer: Paul Yeung/Bloomberg

Social unrest gripping Hong Kong has affected the city’s economy and businesses, and the unemployment rate is likely to rise from current levels, Financial Secretary Paul Chan said in a blog post.

In the Chinese-language post on his website, Chan said many local retail and catering businesses had experienced a “sharp decline” in business, and he warned that the longer the historic protests go on, the more pressure they will pile on small and medium enterprises.

“For foreign tourists and enterprises, the unrest in Hong Kong dampens their appetite for traveling and investment,” Chan said in translated comments. If the movement lasts, he said, “everyone’s employment and livelihood will be at stake.”

The Hong Kong government will consider countermeasures to stabilize the economy, Chan said, without providing details.

The overall economic downturn that Hong Kong is experiencing, including because of external factors such as the U.S.-China trade war and frictions in the technology sector, will “inevitably be transmitted to the job market.” The jobless rate will likely rise from its current 20-year low of 2.8%, Chan wrote. The import and export, wholesale and construction industries are among the most affected and their situations have begun to deteriorate, he said.

Read more about the protests’ hit on Hong Kong’s economy

Over the past eight weeks, hundreds of thousands of people have demonstrated against proposed legislation that would ease extraditions to mainland China. While the planned law has been suspended, the movement has grown to include calls for Chief Executive Carrie Lam’s resignation, causing a political crisis in the city.

Hong Kong is set to report preliminary second-quarter gross domestic product on July 31. The government will also conduct an interim review of the year’s economic growth forecast to reflect possible changes in the coming months more accurately, Chan said.

There have been signs this month that the mass demonstrations are starting to take a toll on the financial hub’s economy as big-spending travelers stay away. Some global luxury retailers said the unrest weighed on sales due to store closures and fewer tourists. The Hong Kong Retail Management Association expressed concern that civil unrest could damage the city’s image as a safe environment, culinary capital and haven for shoppers.

— With assistance by Evelyn Yu