Hong Kong is in the brink of a crisis. A crisis that the CEO Carrie Lam has warned that the international financial hub is facing an economic crisis worse than either the 2003 SARS outbreak that paralysed Hong Kong or the 2008 financial crisis.
“The situation this time is more severe,” she said. “In other words, the economic recovery will take a very long time.”
The city is struggling with a huge hit on its economy and particularly a decrease in the inflow of tourism that usually booms – empty hotel rooms, struggling shops and even disruption at Disneyland. There seems to be a particular effect on the private sector. The demonstrations erupted over two months ago in opposition of the extradition bill which gives China rights to extradition but now oversees a broader movement that is pro-democratic.
Incoming tourism has lowered since the demonstrations gained world-wide attention with hotel occupancy rates down in “double digit” percentages. Group tour books have decreased to 50 percent. Popular tourist attractions such as Disneyland have a lot been affected by the demonstration. CEO Bob Iger tells reporters that “We have seen an impact from the protests. There’s definitely been disruption.”
The world has seen images of violent uphaul between masked protestors and the police as they fire tear gas in the middle of the streets. The Hong Tourism Board told the AFP that AFP that the number of forward bookings in August and September has “dropped significantly”, suggesting the economic toll will linger throughout the summer season. To worsen this situation, travel warning have been issued by countries such as the United States, Australia and Japan. This sporadic impact has also spread to Hong Kong’s popular airline – Cathay Pacific. CP had to cancel over 150 flights and urged its customers not to fly on large protesting dates. Shares in Cathay plunged more than 4% during trading Monday.
Surprisingly, the property market remains intact with incoming money from the Mainland but banks predict that this inflow can easily be reversed as tensions remain stringent between Hong Kong and China. However, the overall picture of the economy of the city was far from worry before the protests began. Growth in Hong Kong was already shrinking from 4.6 percent to 0.6 percent over each year within the first quarter. This has been deduced as the worst quarterly performance that Hong Kong has faced in the last ten years. Data obtained recently shows no progress either with the second quarter of the economy still declining to grow. The government still remain positive in hoping for at least a 2 percent growth this year yet major banks in Hong Kong beg to differ. Earlier, Paul Chan, Hong Kong’s finance secretary, wrote in a blog post: “Many retail and catering operators have said that their recent business volume has dropped sharply.
In light of everything going on in Hong Kong, the city’s Secretary for Commerce and Economic Development wrote to international chambers of commerce to reassure investors and tourists that Hong Kong is still a “welcoming city for investors and visitors and a safe city for traveller”.
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