Hong Kong’s Chan Warns City Could Face Deepest Slump on Record

Hong Kong Financial Secretary Paul Chan warned the city could be hit by its worst economic slump on record even as authorities prepare to ease some lockdown measures amid signs the coronavirus outbreak has been contained.

Reiterating a forecast for a contraction of 4% to 7% this year, Chan said in ablog post on Sunday that the low-end of that estimate would be the deepest drop since records began in the 1960s. A report on Hong Kong’s economy released on Monday is estimated to show a 6.4% contraction in the first quarter from the end of 2019, according to a Bloomberg survey.

“The city is taking a hit from violent vandalism and the pandemic,” Chan wrote in his blog. “First-quarter GDP is expected to be worse and it’s a third straight quarter of contraction, which is worrying.”

With the global economy facing its biggest headwinds since the 1930s, it’s difficult to see a significant rebound in the city’s main growth engines of domestic demand, exports and investments, Chan said.

Hong Kong’s economy was already reeling when the coronavirus emerged in the city earlier this year after months of sometimes violent protests. Now with the outbreak under control — with several days of no new cases reported over the past two weeks — the city is again facing fresh political unrest.

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Taking cautious steps to get back to work, Hong Kong on Monday is reopening government offices and some public facilities. Government employees will start returning to offices and the city is preparing to open facilities including museums and libraries that have been closed during the pandemic. Authorities have yet to decide whether to extend social distancing measures beyond May 7.

The government has announced several rounds ofstimulus to support the economy, including a HK$10,000 ($1,300) cash handout.

Chan said he expects eligible residents will be able to apply for the handout in late June and receive payment in late August.

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