What does technical recession mean for HK
Hong Kong is heading for a recession
From April to June, the gross domestic product in the Chinese special administrative region shrank by 0.4 percent compared to the previous quarter. According to the government, growth of 1.3 percent was still enough at the beginning of the year. In the current summer quarter, the protests of the democracy movement, which have been going on for ten weeks, could cause the economy to contract again. Many tourists avoid the popular shopping destination because of the unrest, while retailers are already complaining about significant losses in sales. With two negative quarters in a row, economists speak of a recession.
"The recent incidents, if they continue, will cause significant disruption to tourism and consumer-related economic activity, further dampen economic sentiment and even damage Hong Kong's reputation as an international financial and business center," said government economist Andrew Au. Hong Kong is also home to one of the largest container transshipment centers in the world.
Another setback is feared
The consulting firm Capital Economis is expecting a decline in economic output of one percent in the current quarter. "In the extreme case of a military intervention by the mainland, the Hong Kong economy would face a deep collapse," said an analysis for customers. "But even if that doesn't happen, the growing threat posed by such measures could be enough to trigger capital flight."
The Hong Kong government is fighting the economic consequences of the protests with an economic stimulus package. The aid worth the equivalent of 2.2 billion euros is also intended to cushion the consequences of the trade dispute between the USA and China. Treasury Secretary Paul Chan cut the forecast for economic growth this year. In the worst case scenario, gross domestic product could stagnate. So far, a plus of two to three percent had been targeted.
Cathay Pacific boss resigns
In the wake of the ongoing mass protests, the head of the Hong Kong airline Cathay Pacific, Rupert Hogg, surprisingly resigned. The airline, which is 30 percent owned by Air China and is a symbol of Hong Kong's colonial past because of its close British ties, came under fire after some of its employees took part in demonstrations.
He has left his top position: Cathay Pacific boss Rupert Hogg
According to observers, Hogg's resignation shows that Hong Kong companies are coming under increasing pressure to support the Beijing leadership. The former British crown colony is home to a number of large international corporations. With the Briton Hogg, the top manager Paul Loo also took off his hat. Hogg's successor will be Augustus Tang, head of the Hong Kong Aircraft Engineering Company.
New demo in the city center
The demonstrations against the pro-Chinese government continued on Friday. According to initial estimates, more than 10,000 people took part in a rally in the city center. Further protest marches are planned for Saturday and Sunday. The protests in the economic metropolis of Hong Kong have been going on for ten weeks. The demonstrators accuse the Hong Kong government of being too close to the communist leadership in Beijing. Prime Minister Carrie Lam, in particular, has been massively criticized for her proximity to Beijing and has been faced with calls for resignation from the demonstrators for weeks. Hong Kong has been a Chinese special administrative region since 1997, in which the residents of the former British crown colony enjoy greater personal freedom than in the People's Republic. There is now growing international concern that Beijing could intervene violently.
Meanwhile, five demonstrators have been arrested for allegedly desecrating a Chinese flag. They are said to have taken down a large flag of the People's Republic and thrown it into the water at the beginning of August. They are now facing up to five years in prison.
kle / stu (rtr, dpa, afp)
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