The Strategist

Hong Kong increases consumption during anti-government protests

08/05/2019 - 12:29

Hong Kong Government Statistics Agency (C&SD) published data showing that mass protests in the Special Administrative Region (SAR) affected macroeconomic indicators in the local economy. Hong Kong's GDP growth rate in the second quarter of 2019 was 0.6% year-on-year, while it almost reached 5% in 2018.

Studio Incendo
Studio Incendo
The city, which was under British control until 1999, has been a refuge for Chinese political dissidents since the end of the 19th century and, among other things, plays an important role in the political history of China and the Chinese revolutions. According to C&SD, investments were the most affected sector of the political crisis caused by the intention of the SAR authorities to expand the list of reasons for deportation from Hong Kong. The investments in fixed assets in Hong Kong in the second quarter decreased by 12.1% yoy, in the first - by 7%. The second point is the decline in Hong Kong's gross exports: it amounted to 5.4% year-on-year against 3.7% in the previous quarter.

However, imports decreased over the same time by 7% (and by 4.2% in the first quarter). As a result, Hong Kong's net exports, taken into account in GDP, supported rather than reduced economic growth (the Hong Kong dollar remains stable). Exports of services grew by 0.2% (in the first quarter by 0.8%), imports of services increased by 1.7% (they were falling a quarter earlier). Other components that supported Hong Kong's GDP are private and public consumption. Private spending in the SAR grew in the second quarter by 1.2% year-on-year against 0.4% in the first; state consumption increased by 4% against 4.5% a quarter earlier.

The Hong Kong government, commenting on favorable statistics (excluding investments) at this scale of the political crisis, barely mentions the crisis itself. The U.S. and PRC trade war is considered to be the reason for the slowdown in export of services that make the main contribution to the decrease in GDP growth. The decline in investment in Hong Kong is quite common, and the slowdown in GDP growth has not stopped the increase in per capita GDP. The indicator in 2019 will clearly continue to grow and will exceed $ 50 thousand for the first time.


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