August 14, 2020 at 12:27PM

Hong Kong’s government downgraded its full-year economic forecast on Friday after a recent flare up in coronavirus cases threatened to further derail the city’s economy. The government now expects the city’s economy to shrink by between 6% and 8% in 2020, compared to its previous projection for a contraction of between 4% and 7%.

The downgrade came after the Hong Kong economy contracted by 9% in the second quarter compared to a year ago. It was the fourth consecutive quarter of year-over-year decline in gross domestic product, official statistics showed.

The updated data on the city’s economic performance exactly matched its official advance estimates. Hong Kong has reported more than 4,300 cumulative cases, including 66 deaths, according to official statistics.

Economists had earlier warned that Hong Kong — a semi-autonomous Chinese territory and a major financial hub in Asia — would struggle to recover from its economic slump given a recent flare up in coronavirus cases. Several analysts downgraded their GDP forecasts for the city last month.

The renewed outbreak, which began in July, led the government to tighten social-distancing measures that includes a ban on large gatherings and restrictions on dine-in services at restaurants. Hong Kong’s leader Carrie Lam also warned that the increase in daily infections could overwhelm the city’s health-care facilities and cost lives.

Hong Kong cuts GDP forecast for 2020 after economy contracts 9% on-year in the second quarter, CNBC, Aug 14

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From: The FxPro News Team
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