Recession-hit HK posts 7.8% growth in Q1

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Hong Kong's economy jumped back into growth in the first quarter of the year, ending the city's most pronounced period of recession in its modern history.
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Hong Kong’s economy jumped back into growth in the first quarter of the year, ending the city’s most pronounced period of recession in its modern history.

The global financial center had been reeling from the double whammy delivered by social unrest in 2019 and the COVID-19 pandemic. It recorded six consecutive quarters of negative growth, a more prolonged downturn than during both the 1997 Asian financial crisis and the 2007-08 global crash.

That came to an end on Monday when the government announced the economy grew 7.8 percent on year in the first three months of 2021.

The stellar figure, rebounding from a 2.8 percent decline seen in the October-December period last year, was mainly powered by fast-recovering exports and the low base of comparison a year ago, the Census and Statistics Department said in a statement.

On a quarter-to-quarter basis, Hong Kong’s gross domestic product rose by 5.3 percent in the first quarter.

The sharp rebound in the first quarter mainly reflected the strong growth of exports of goods amid the global economic recovery led by the Chinese mainland and the United States, a government spokesman said.

Analyzed by major GDP components, goods exports soared by 30.6 percent over a year earlier in the January-March period, up significantly from an increase of 5.5 percent in the fourth quarter of 2020.

Some other economic indicators also improved year-on-year in the first quarter. Private consumption expenditure increased by 1.6 percent against a 6.9 percent decline three months ago, and fixed capital formation gained by 4.5 percent, up slightly from 3.6 percent growth a quarter earlier.

The city was among the first places outside China’s mainland to record a coronavirus infection, and the economy plunged by a record-breaking 9.1 percent in the first quarter of 2020. Since then, Hong Kong has managed to keep the virus’ spread down to a little more than 11,000 infections thanks to strict quarantine and economically punishing social distancing measures.

Financial secretary Paul Chan has forecast full-year growth of 3.5 to 5.5 percent in 2021. 

But the city has warned that the economy remains below its pre-pandemic levels and the recovery will be uneven. Coronavirus restrictions are keeping Hong Kong all but closed to those without work permits and people who do arrive need to undergo three weeks of compulsory hotel quarantine. 

The tourism and retail sectors remain on their knees and unemployment is around 7 percent.

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