Protests in World’s Hub for Hubs Could Trigger Global Recession

• Published Month : Monday, 28 Oct 2019 06:00 pm

Hong Kong is facing serious political unrest since past few months that is driving the economy towards a serious economic crisis or even recession. This might even lead to recession across the globe.

Hong Kong that is known as the world’s hub for hubs for almost 40 sectors, industries as well as trades has already been struggling due to the ongoing U.S.-China trade war. But, now with the escalating anti-government protest is leading the region towards an economic crisis that has also been the semi-autonomous region of China, a buyer’s paradise & gourmet destination for masses of tourists every year.

On the other hand, as per the recent report by the World Bank, Hong Kong is rated among top 3 economies with business enhancing climate reforms, however the biggest equity deal across the world that was expected to unfold in Hong Kong this month has been kept on hold, which is followed by the exceptional profit warnings by banks driving the economy towards the 1st recession in the decade.

When the effect of protest was mild as per the sources than the economy shrank by almost 0.4 percent in April-June quarter from the last quarter. When the protests were spreading across the region it instigated further slowdown along with disrupting traffic, paralyzing shopping & tourist zones, also closing down the city’s sprawling airport many times.

Here is a Highlight of report by Hong Kong Trade Development Council (HKTDC) published recently:

• Hong Kong’s economy expanded modestly by 0.5% year-on-year in real terms in the second quarter of 2019, after the growth of 0.6% in the preceding quarter. With the escalating China-US trade tensions and the dampening domestic consumption and investment sentiments, the Government’s forecast of Hong Kong’s economic growth for 2019 is revised downwards from 2-3% in the May round of review to 0-1%
• With the elevated pork prices caused by disruptions to the supply of fresh pork, the Government’s forecast of Hong Kong’s underlying consumer price inflation for 2019 is revised upwards from 2.5% in the May round of review to 2.7%.
• The value of retail sales, in nominal terms, decreased by 23% year-on-year in August 2019 over the same month a year earlier, compared with a year-on-year decrease of 11.5% in July 2019.
• The labor market conditions remain tight. The seasonally adjusted unemployment rate remained unchanged at 2.9% in July – September 2019, same as that in the three months ending August 2019.
• Merchandise exports dropped by 7.3% in September 2019 over the same month a year earlier, after a year-on-year decrease of 6.3% in August 2019.

The Hong Kong chaos with all its growth pillar under stress is not only segmented to the regional impacts but could lead to even global crisis or recession. According to some experts this political unrest in Hong Kong might possibly spill over international markets extensively.