The Hong Kong economy contracted the most on record since 1974 in the first quarter due to weak domestic and external demand amid coronavirus, or covid-19, pandemic, the advance estimate from the Census and Statistics Department showed Monday.
GDP decreased 8.9 percent in the first quarter from a year earlier, following a 3 percent drop in the fourth quarter. This was the largest decline on record since the reference period of the first quarter of 1974.
This was the third quarterly decline and the economy moved deeper into the recession.
Financial Secretary Paul Chan said "Our economic situation is very challenging." He said "We are deep into recession."
Quarter-to-quarter, GDP decreased by 5.3 percent in real terms in the first quarter, which was also the steepest on record.
The expenditure-side breakdown showed that private consumption expenditure logged a double-digit annual fall of 10.2 percent, while government spending grew 8.3 percent.
Gross domestic fixed capital formation plunged 13.9 percent.
Exports of goods decreased 9.7 percent in and imports of goods were down 10.9 percent. Likewise, exports of services fell significantly by 37.8 percent and imports of services decreased 25.4 percent.
Looking ahead, with the COVID-19 pandemic causing a severe contraction of global economic activity, Hong Kong's exports will remain under notable pressure in the near term, a government spokesman said.
Hong Kong's near-term economic outlook is subject to very high uncertainties, hinging crucially on the evolving global public health and economic situations, the spokesman added.
The government expects the economy to contract in the range of -4 percent to -7 percent this year.
Unlike other economies which may return to normal after Covid-19 subsides, Hong Kong has more challenges ahead, Iris Pang, an ING economist said.
Even though Covid-19 cases appear to be subsiding in Hong Kong, pro-democracy protesters are returning to the streets and trade tensions are heating up again, the economist noted. A longer recession is expected.
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