Hong Kong Has Worst Quarter Since 1974
Hong Kong is on pace for the biggest economic slowdown on record, with figures showing this last quarter to be worse than in the third quarter of 1998 when GDP fell 8.3%.
The months ahead will be difficult for the city. "Our economic situation is very challenging. We are in deep recession," Financial Secretary Paul Chan Mo-po told lawmakers on Wednesday. The first quarter shrinkage was the worst quarterly performance for the economy since 1974.
Exports fell 9.7%; retail sales suffered badly, falling 34% year on year. Tourism, a normally booming industry for Hong Kong, plummeted 99%. From January to March, unemployment surged to the highest rate in nearly a decade. The effect of this crisis will long-lasting, warned Chan warns, projecting that the economy might shrink from 4 to 7% annually in 2020.
Chan added, "The magnitude of Hong Kong's economic recession in the first quarter could be worse than 2008's global economic tsunami, or the impact of the Asian financial crisis [in 1997-98],"
Hong Kong, is, of course, only one of the Asian nations whose economy has been ravaged by the virus. The Japanese and Singaporean economies might be the hardest hit of all, according to Steve Cochrane, chief Asia Pacific economist at Moody's Analytics.
Japanese data showed the economy shrinking by 6.3% year over year in the three months to December; Singapore's shrank 2.2% for the quarter ending in March. While China's economy has shrunk over 6%, Singapore and Japan, after some early successes, have not been able to contain the spread of Covid-19 as successfully as it has been contained in Hong Kong and mainland China.
"Japan already was in recession coming into this; the first quarter for Singapore was very weak, I think this quarter will be even tougher for Singapore given the lockdown," Cochrane told CNBC. Cochrane continued, warning that a real hard lockdown for Japan might be imminent.
"And then there is potential that in Japan if the coronavirus spreads further, there could be more of a real lockdown rather than the kind of a soft lockdown that's in Japan right now."
For the first time in over a half-century, this rapidly growing region of the world will not see any growth this year.
Right now, the sun is setting in the East--but only temporarily, we hope.