Hong Kong fell into a deeper than expected recession in Q3. GDP growth came in at -3.2% q/q in Q3, after -0.4% q/q the previous quarter. Two consecutive quarters of negative q/q growth mean that Hong Kong has fallen into a technical recession, as widely expected. The breakdown shows that the slowdown is broad-based, with household spending, investment and external trade all deteriorating. Government spending picked up pace this year, but evidently not enough to make up for other downside pressures. Ongoing social unrest, uncertainty in the external environment and the continued slowdown in China mean that the downturn in the Hong Kong economy could last. Hong Kong’s Financial Secretary said this week that a full-year economic contraction is “very likely”. After +3.0% in 2018, we expect Hong Kong’s GDP growth at +0.4% in 2019 and +0.3% in 2020, with downside risks to these forecasts.
