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  • Hong Kong is facing its first recession since the global financial crisis in 2008.

  • Influenced by unprecedented factors.

  • Including its own ongoing anti-government protests and the trade stalemate between Washington and Beijing.

  • In February, the government predicted Hong Kong's economy would grow up to 3% this year.

  • Six months later, that forecast was slashed to 0 to 1%.

  • This time, the economic downturn has been fast.

  • Someone has described it as a tsunami.

  • Compared with past downturns that we have handled, such as those caused by SARS, and past economic storms, I'm afraid this is more serious.

  • Since June, the city's tourism industry has suffered from the increasingly violent and disruptive pro-democracy protests.

  • In August, normally a strong month for tourism, arrivals in Hong Kong dropped nearly 40% from a year ago.

  • It's the worst decline since May, 2003 when Hong Kong was grappling with the deadly SARS virus.

  • Occupancy rates of hotels in some districts fell around half while room rates decreased 40 to 70%.

  • Mainland Chinese tourists make up over 70% of total tourist arrivals in Hong Kong.

  • But when protests started in June, that number has dropped.

  • And there's also increase in anti-China sentiment in the city.

  • 16 years ago, once the all-clear came after the SARS outbreak, visitor arrivals and business confidence swiftly recovered.

  • But, as the anti-Beijing mood grows in Hong Kong, so does opposition to the protests in mainland China.

  • The protests and the drop in tourists have disrupted the city's retail sales.

  • In August, sales dropped 23% from a year ago.

  • The worst monthly decline on record.

  • Luxury items were among the biggest victims.

  • Sales of jewelry, watches, and other valuable gifts fell nearly 50%, marking a record low.

  • The protests have been disruptive for life especially on the weekends.

  • In early October, there was a time when entire department stores were closed and major train stations were also shut down.

  • And also, if you go to popular shopping districts like Causeway Bay, it's actually a popular destination for protests now.

  • And then there's the trade dispute between China and the U.S..

  • Though the two sides emerged from the latest round of trade talks with a truce in place, there's still a lot to be worked out.

  • The effects of the stalemate have been felt in Hong Kong which relies heavily on reexporting Chinese goods.

  • Total exports are expected to shrink nearly 4% this year.

  • So far, the finance sector has weathered the protests.

  • Prohibition on face covering regulation.

  • However, when the government invoked colonial-era emergency powers, it put to the test Hong Kong's rule of law.

  • The authorities say they will only use the emergency provision to ban people from wearing masks at public gatherings.

  • But it also allows the chief executive to enact drastic regulations such as censorship, arrests, and foreign exchange controls.

  • The government said it had no such plans.

  • Declining reexports and the government's struggle to restore order to the city have erased any economic momentum from the start of 2019.

  • Experts believe numbers for the third quarter will confirm Hong Kong is in technical recession.

  • Despite the major decline in Hong Kong's economic indicators, Hong Kong's financial buffers still remain strong.

  • That can come under pressure if Hong Kong's status as a global financial and business center comes under fire.

  • And that could be really difficult and challenging for its longterm growth prospects.

Hong Kong is facing its first recession since the global financial crisis in 2008.

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