Hong Kong expects unrest to cost 2 percentage points for GDP growth

Hong Kong expects unrest to cost 2 percentage points for GDP growth

Hong Kong is expected to record its first budget deficit since 2004 due to unrest within the city. The economy is expected to cost up to 2 percentage points of output growth according to Financial Secretary Paul Chan.

The expected deficit for the 2019-2020 fiscal year will be caused by an adverse economic environment, decreased tax revenue and income from land sales, and relief measures to be announced during the year as Chan told lawmakers at the legislative council on Monday. The economy is forecast to contract 1.3% in 2019 from a year earlier, Chan said.

The near 6 months of civil protests and export pressure from the U.S.-China trade war have been putting an enormous strain on Hong Kong this year.

“Hong Kong’s economy is now in extremely difficult times,” Chan said. “To restore the economy, different sectors have to come together to stop violence so that social order can be restored, citizens can return to normal life, businesses can resume normal operations, so that room can be created for rational dialogue.”