HK economy and unemployment rate could worsen, finance chief Paul Chan warns, saying resurgence of protests could be the greatest hurdle to recovery

19-May-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Hong Kong’s negative economic growth and unemployment rate could worsen, the finance chief has said, while adding that a “resurgence of violence” could be the greatest obstacle to the recovery of the coronavirus-ravaged economy.

Financial Secretary Paul Chan Mo-po issued the warning on his blog on Sunday after the recent return of anti-government protesters, mainly in small groups inside shopping malls across the city, amid what appeared to be an improving public health situation.

But a recent return of local Covid-19 infections added uncertainty to the pandemic outlook, Chan said, meaning he was not optimistic about the economy in the second quarter.

The Asian financial hub’s gross domestic product suffered its worst decline on record in the first quarter, shrinking by 8.9 per cent year-on-year.

Those who still advocate a ‘burn with us’ mentality are irresponsible and harm others while not benefiting themselves either. This could be the biggest obstacle to Hong Kong’s economic recovery

Paul Chan, financial secretary

He said the city’s unemployment rate would hit a new high in April as many sectors had been badly affected by various social-distancing measures enforced from March to check the spread of the virus. Hong Kong’s jobless rate surged to a 10-year high of 4.2 per cent in March.

“There has been news from time to time about employees taking unpaid leave, having pay cuts and being sacked. It is estimated that the unemployment rate in April will inevitably rise more sharply,” he said.

“The problem of underemployment is also likely to deteriorate further, meaning workers will face greater pressure in life and to support their family.”

The finance chief warned “a resurgence of violence” related to anti-government protests which have gripped the city since June would mean no end in sight for the city’s economic recovery.

“Those who still advocate a ‘burn with us’ mentality are irresponsible and harm others while not benefiting themselves either. This could be the biggest obstacle to Hong Kong’s economic recovery,” he said.

His warnings came after hundreds of protesters gathered in shopping malls across the city on Saturday. Eight people were arrested for unlawful assembly and assaulting or obstructing officers, police said in a post on their Facebook page.

Police made their largest mass arrest in recent months last Sunday and early Monday, detaining 230 people after similar protests in about 10 malls across Hong Kong on Mother’s Day.

To boost local consumption and ease economic woes, Chan announced in his budget in February a HK$10,000 (US$1,290) cash handout for all permanent residents over the age of 18.

Chan said on Sunday that following the Legislative Council’s recent approval of the budget, residents would receive the handouts in mid-July at the earliest if they registered through online banking from the end of next month.

Meanwhile, Chief Secretary Matthew Cheung Kin-chung on Sunday said in his blog post that non-locals could apply for the handout through the Poverty Commission from September.

Considering the financial pressure faced by low-income families, Cheung, also the chair of the commission, added that recipients of social welfare payments would get an additional allowance in mid-June at the earliest.

Separately, Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said there was potential for Hong Kong businesses to develop the Southeast Asian market, and that the government was planning to send people to Indonesia once the pandemic came under control.

“Hong Kong businesses have many links in Southeast Asia. Indonesia is planning to move its capital city and will need huge amounts of money, and our businesses can provide fintech services to them,” Hui said, speaking at a forum held by the pro-establishment Democratic Alliance for the Betterment and Progress of Hong Kong.

He was referring to Indonesia’s plan to relocate its capital city from Jakarta to a planned city in East Kalimantan, on Borneo, as Jakarta struggles with environmental problems.


Category: Hong Kong

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