Hong Kong economy shrinks record 8.9% in first quarter

Hong Kong suffered its worst quarterly contraction since modern records began, official figures showed on Monday.

The financial hub is now experiencing its third-straight quarter of negative growth — its longest financial downturn since the aftermath of the 2008 global financial crash.

Advance figures released on Monday showed an 8.9 percent on-year contraction in the first quarter — the worst decline since the government began compiling data in 1974.

The result was a bigger fall than the 8.3 percent recorded during the Asian financial crisis in 1998 and the 7.8 percent seen in early 2009.

“Faced with a collapse in global demand, Hong Kong’s small, open economy is taking a severe hit,” Bloomberg Intelligence economist Qian Wan said in a note to clients ahead of the results.

The figures were worse than most projections, even though the city has made impressive headway against the novel coronavirus outbreak.

Hong Kong confirmed infections have been kept to around 1,000 with six deaths.

The financial hub has managed to largely end local transmissions of the disease, with almost all new cases coming from people returning to the city from overseas who are quickly quarantined.

Officials are beginning to ease some social distancing measures, in a move that will boost the local economy.

But in an international finance hub so dependent on the rest of the world, plenty of headwinds remain as the coronavirus continues to wreak economic chaos elsewhere.

“Even if there is improvement, it will be gradual and small,” said financial secretary Paul Chan, who estimates the economy will contract between 4 and 7 percent this year.

More global economic damage from the virus and a resurgence of local unrest would both result in “major downside risks” to Hong Kong’s economy, said Oxford Economics senior economist Tommy Wu.