Hong Kong on Tuesday announced an unexpected easing of coronavirus social distancing restrictions as the Asian financial center published data showing its first economic contraction since the start of the pandemic.
Hong Kong’s easing of COVID-19 measures contrasts sharply with the continuation of strict measures in mainland China, where residents in parts of Shanghai are confined to their homes and Beijing on the verge of lockdown.
Official data shows Hong Kong’s GDP contracted by 4 percent in the first quarter of the year compared to the same period in 2021, much worse than the 1.3 percent reduction projected by economists surveyed by Bloomberg. is performance.
Economists said the contraction showed the heavy burden that the Chinese government’s strict “zero COVID” policy has placed on Hong Kong.
City leader Carrie Lam said a drop in Covid cases since the worst outbreak earlier this year made it possible to reopen beaches and pools from this Friday and allow up to eight people to dine together .
“We were concerned that .. there might be an increase in confirmed cases, fortunately that did not happen and we see the epidemic stabilizing,” Lam said on Tuesday.
But economists said the latest data was a warning sign about the attractiveness of the financial hub, which is tied to China’s overall COVID policy and tighter controls on international travel.
,[The GDP figures are] Which, by the way, is below market expectations,” said Kevin Lai, chief economist for Asia excluding Japan at Daiwa Capital Markets.
“Hong Kong was hit by the Omicron outbreak, but then another surprise was that although we saw a decline in service exports and private consumption. , , Goods exports have also declined significantly,” Lai said.
Lai said exports slowed due to a fall in demand and border closures between Hong Kong and the mainland, as well as lockdowns in Chinese cities.
He said Singapore, South Korea and Taiwan had GDP growth rates of more than 3 percent in the first quarter. “So with zero-Covid. , , Hong Kong was hit particularly hard. ,
From May 19, many other places, from bars to mah-jong parlors, will reopen and cruises will also be allowed to resume. Restaurants can open before midnight till 10 pm. Bars can open till 2 pm, but only four people will be allowed per table.
Hong Kong will maintain its strict quarantine on incoming passengers and will continue to ban airline routes if a certain number of COVID-positive passengers are detected on a flight.
The harsh restrictions have helped trigger the outflow of residents and migrants and prompted some global companies to reconsider the size of their presence in the city.
Hong Kong reported an 8.3 percent decline in gross domestic fixed capital formation – a measure of investment confidence – in the first quarter.
“Companies in Hong Kong are screaming, especially foreign ones, and the sharp deterioration in the investment situation is very telling,” Lai said.
The city’s reputation has also been damaged by crackdown on freedom of expression following the 2019 anti-government protests.
Hong Kong fell 68 places to 148 among 180 countries in the 2022 Press Freedom Index published on Tuesday, which is now in a similar position to Sri Lanka, the Philippines and Turkey. According to a Financial Times analysis, it was the fourth-largest year-on-year drop in the rankings since the index was first compiled in 2002.
Lam stressed that Hong Kong’s press and media were “as vibrant as ever”, but that journalists and media organizations were “not above the law”.