Hong Kong economy shrinks 3.5 % in 2022

HONGKONG (AFP) – Hong Kong’s economy shrank by 3.5 percent in 2022, with exports plunging and the city’s worst-ever coronavirus outbreak battering businesses, the government announced Wednesday, while saying it hoped China’s reopening would spur a recovery.

Vast swathes of Hong Kong’s economy were shut down at the start of the year, when the territory recorded one of the world’s highest COVID per capita death rates as it dealt with a wave of the highly transmissible Omicron variant.

In September, the government began easing the harsh pandemic restrictions that had left Hong Kong internationally isolated and had damaged its status as a financial hub.

Gross domestic product (GDP) dropped all four quarters in 2022, with the final quarter seeing it fall 4.2 percent year-on-year, according to the preliminary figures released Wednesday.

“Domestic demand slackened, dragged initially by the (Omicron-fuelled COVID wave) and subsequently by tightened financial conditions,” a government spokesperson said in a statement.

“Total exports of goods plunged amid the sharp deterioration in the external environment and disruptions to cross-boundary truck movements.”

Hong Kong was in a deepening recession in 2019 and 2020 after the former British colony was roiled by pro-democracy protests and the start of the pandemic.

The city found brief respite in 2021, as its strict pandemic controls largely kept it virus-free, with the economy rebounding by 6.4 percent – gains later wiped out by the outbreak at the start of 2022.

China’s decision to reopen its borders in December sparked hopes of a recovery for Hong Kong, the government spokesperson said Wednesday, adding that the city’s services sector would benefit from “an expected strong rebound of inbound tourism”.

“An expected faster growth of the mainland economy and the relaxation of cross-boundary truck movement restrictions should provide some support (for the exports of goods),” said the official.

Government spending was the biggest driver of Hong Kong’s economic growth in 2022, increasing by 8.1 percent year-on-year.

Private consumption expenditure decreased by 1.1 percent from 2021, according to the data, while exports and imports of goods fell by 13.9 and 13.1 percent respectively.