HK recession shows sign of easing in Q3

Hong Kong

HONG KONG'S long recession showed signs of easing in the third quarter, with a gradual improvement in domestic and external demand from an improving Chinese economy, an easing of the Covid-19 outbreak and stronger financial market activity.

The economy shrank 3.4 per cent in July-September from a year earlier, its fifth straight quarterly contraction, government advance estimates showed on Friday. That compared with a year-on-year contraction of 9.0 per cent in April-June.

Activity picked up markedly from a slump early in the year as anti-virus measures were gradually relaxed and people returned to offices and stores.

"Looking ahead, the continued solid recovery of the mainland (Chinese) economy should render support to Hong Kong's exports in the coming few months," a government spokesman said in a statement.

The government said global demand and trade flows would further improve if the recovery of major advanced economies continues, and economic activities should keep recovering this year if local Covid-19 infections stabilise.

On a seasonally adjusted quarter-on-quarter comparison basis, GDP increased 3.0 per cent from the second quarter, compared with a 0.1 per cent slide in the previous three months.

Economic conditions had deteriorated with a third local wave of infections from the pandemic, but the pressure showed signs of stabilising as the virus situation abated in September.

"I hope that the immigration policies can be relaxed by the first quarter of next year, then the economy can really begin to recover," said Samuel Tse, an economist at DBS Bank.

The global financial hub's economy had already been hit by often violent anti-government protests late last year and the US-China trade war.

Advance readings showed consumption and investment remaining weak in Q3, though economic activity likely drew some support from a strong bounce in China's economy and from the Hong Kong government's stimulus measures. REUTERS