Hong Kong private sector shrunk to its weakest in 21 years
According to an IHS Markit survey, business activity in Hong Kong’s private sector has fallen to its weakest in 21 years in October, burdened by anti-government protests and softened global demand.
The retail and tourism industries of the region have been hit for more than five months by often violent demonstrations of street protests with initial government data indicating that, for the first time in a decade in the third quarter, the economy has gone into contraction. Competition from the mainland of China declined at a fast rate starting in July 1998, while businesses have cut back on purchasing.
“Hong Kong’s private sector stayed embroiled in one of its worst downturns for the past two decades during October, with the latest PMI survey indicating a deepening economic malaise,” said Bernard Aw, IHS Markit’s chief economist.
“As new orders continued to fall rapidly, led by a record decline in demand from mainland China, firms were becoming increasingly negative about the outlook.” The seasonally adjusted Hong Kong Purchasing Managers’ Index (PMI) fell to 39.3 in October, down from 41.5 in September, and showed the worst deterioration since the global financial crisis in November 2008.
A survey over 50 shows growth, while a figure under 50 indicates contraction.
Nearly all growth engines in the financial hub in Asia stalled in summer, with stores, shopping centres and restaurants shut down to prevent clashes between riot police and protesters, as trade war between China and the United States intensified. Hong Kong is one of the most popular tourist destinations in the world and a lively container port.
Demonstrators are upset at what they see as Beijing tightening its grip on the city’s cherished liberties promised in 1997 by the formula “one country, two systems.”
In the middle of June, protests escalated and showed no sign of decline as demonstrators continued to call for universal suffrage and independent investigation into what they consider to be excessive police action, and for other demands.
The police, who sometimes fired rubber bullets and tear gas on protestors throwing gasoline bombs, said that they showed restraint against the escalating violent situation.