The Hong Kong Special Administrative Region (HKSAR) confirmed on Friday that it has entered its first recession in 10 years amid unrest in the city.
The city's economy shrank by a seasonally adjusted 3.2 percent in July-September from the previous quarter, in line with a preliminary reading, revised government data showed. The year-on-year figure for the third quarter shows a drop of 2.9 percent, the biggest such contraction in a decade.
The forecast by the HKSAR government also predicts that the city's economy will shrink by 1.3 percent for the full year, marking the first year of recession since the global financial crisis a decade ago.
HKSAR government economist Andrew Au said that the global economic slowdown and trade tensions between China and the U.S., as well as the protests, contributed to the decline.
"Domestically, the local social incidents, with intensifying violence in the last few months have kept visitors away, taken a heavy toll of consumption demand, and seriously dampened investment sentiment," Au said.
As the Asian financial hub struggles with the impact of months of turmoil, business activity in Hong Kong fell at its sharpest pace in more than two decades last month. The IHS Markit Hong Kong PMI fell to the lowest on record of 39.3 in October.
The economic slowdown has shown up in many areas including exports of both goods and services and personal consumption. Some shopping malls and shops are closing early as the chaos worsen, and retailers are suffering from a sharp drop in sales.
Retailers suffered from a sharp 18-percent year-on-year drop in sales in September. While August retail sales in Hong Kong were the worst on record — down 23 percent from a year earlier.
"I think we really need to do something..." said Ronald Wan, CEO of a Hong Kong securities company Partners Financial Holdings, "to make the economy back to the right track."
