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Hong Kong Economy Shrinks For First Time Since 2009

Hong Kong's economy shrunk for the first time in a decade in 2019 as widespread socio-political unrest hurt economic activity, preliminary figures from the Census and Statistics Department showed on Monday.

Gross domestic product decreased 1.2 percent for the full year 2019 after a 2.9 percent expansion in the previous year.

"The local social incidents with violence during the quarter took a further heavy toll on economic sentiment as well as consumption- and tourism-related activities," a government spokesman said.

"Total exports of goods continued to decline amid the difficult external environment, though at a somewhat narrower rate."

The economy contracted 2.9 percent year-on-year in the fourth quarter of 2019 after a 2.8 percent shrinkage in the previous three months.

The Hong Kong economy thus entered a technical recession, which is defined as two consecutive quarters of GDP decline.

In the first and second quarters of 2019, the economy grew 0.7 percent and 0.4 percent, respectively.

The quarterly year-on-year decline in GDP was driven by a 25 percent slump in exports and a 16.2 percent fall in gross fixed capital formation.

On a seasonally adjusted quarter-on-quarter basis, GDP decreased 0.4 percent in the final three months of 2019.

"The outlook for the Hong Kong economy in 2020 is subject to high uncertainties, including those stemming from the pace of global economic recovery, US-Mainland trade relations and the local social incidents," the government spokesman said.

"It also depends much on the development of the novel coronavirus infection in Hong Kong and Asia, which could further weigh on economic sentiment, consumption- and tourism-related activities and even economic performance of some Asian economies."

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