Hong Kong second-quarter GDP grows 0.5% year-on-year, but trade war, protests stoke recession risk

FILE PHOTO: A general view of the financial Central district in Hong Kong, China July 25, 2019. REUTERS/Tyrone Siu /File Photo

HONG KONG (Reuters) – Hong Kong’s economy grew 0.5% in the second quarter from a year earlier, the government said on Friday, marginally less than a preliminary estimate, but the escalating U.S.-China trade war and growing political unrest are sparking fears the financial centre could soon tip into recession.

The revised figure marked the city’s slowest expansion since the global financial crisis a decade ago, and was down slightly from both an initial reading of 0.6% and the first quarter’s 0.6% pace.

Amid growing internal and external pressures, the government also confirmed it was slashing its full-year 2019 growth forecast to a range of 0%-1% from the previous 2%-3%, which it had flagged on Thursday when it announced a modest economic support package.

On a quarterly basis, the economy shrank by a seasonally adjusted 0.4%, slightly more than an initial estimate of -0.3%, and decelerating from a 1.3% expansion in the first quarter.

Months of increasingly violent confrontations between police and protesters have plunged the international business hub into its worst crisis since it reverted from British to Chinese rule in 1997.

Tourists are cancelling bookings, retailers are forecasting a sharp drop in sales and the stock market is tumbling, adding to pressure the city is feeling from China’s economic slowdown.

Reporting by Donny Kwok and Twinnie Siu in Hong Kong; Editing by Kim Coghill

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