Hong Kong’s economy shrank by 1.4 per cent in the second quarter of 2022 compared with the same period last year amid the continued impact of the fifth coronavirus wave, dragging the city into a recession. Gross domestic product (GDP) decreased in the second quarter while contracting by a revised 3.9 per cent year on year in the first three months, according to preliminary data released by the Census and Statistics Department on Monday. A recession is defined as a contraction of GDP for two or more successive quarters. The last time Hong Kong fell into recession was in 2020 during the initial phases of the Covid-19 pandemic. Hong Kong’s economic performance in the second quarter was worse than authorities initially expected, with the city no longer able to meet the previous estimate of 1 to 2 per cent growth for 2022. The government said it would downgrade its full-year forecast on August 12, when the final GDP data was due to be made public. The downgrade will mark the second time authorities have lowered their annual growth forecast in three months. A government spokesman attributed the poor performance to sluggish exports, which decreased 8.6 per cent during the second quarter year on year and worsened from the year-on-year decline of 4.5 per cent in the first three months, as well as the impact of coronavirus social-distancing curbs on businesses.
The city’s private consumption expenditure remained stagnant during the second quarter from the same period last year after a 5.8 per cent decline in the first three months. “Looking ahead, the worsening global economic prospects will continue to weigh on Hong Kong’s export performance for the remainder of the year,” the spokesman said. “Elevated inflation in advanced economies amid supply-side disruptions and persistent tension in Ukraine, and the stepping up of monetary policy tightening by many major central banks in response are expected to dampen economic growth significantly.” Even if the mainland’s economy showed signs of further revival, the spokesman said, it might not be able to fully offset the deterioration occurring in advanced economies. “Nonetheless, if cross-boundary land transportation between the mainland and Hong Kong continues to improve, our external trade may get some relief,” he said. In May, the government downgraded its forecast for 2022 to 1 to 2 per cent growth from 2 to 3.5 per cent. Hong Kong last year recorded a 6.4 per cent rise in GDP.