Hong Kong’s Economy Is in ‘Deep Water,’ Finance Chief Says

Hong Kong’s unemployment rate is likely to continue rising after hitting a nine-year high in February as the city reels from the effects of the coronavirus outbreak, according to Financial Secretary Paul Chan.

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Economic data is deteriorating and likely to get worse, he wrote in a blog on Sunday, citing falling employment statistics and retail sales figures. The city’s jobless rate rose to 3.7% for the December-to-February period, the government said on Tuesday, marking the fifth straight month of higher unemployment and the most since 2011, with the equivalent figure for the consumption and tourism sectors climbing to the highest in a decade.

“Hong Kong’s economy is in deep water,” Chan said. “These figures still do not fully reflect the latest developments in the epidemic, and I believe that the unemployment rate will continue to rise in the short term.”

Hong Kong’s economic data has weakened steadily since protests started in June, before the coronavirus outbreak began in January. After initially slowing the rate of infections, the city has recently seen an increase in cases from people returning from overseas.

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Chan urged the banking sector to help customers deal with their capital turnover needs and provide companies with the option to restructure debt. Landlords should reduce rents for their tenants, he wrote.

Hong Kong will release its monthly consumer-price index on Monday, followed by an equivalent gauge of producer prices on Tuesday and trade data on Thursday. Retail sales, due to be announced on March 31, fell 21.4% percent in value in February from a year earlier.

As part of its relief measures, the government last month said that all permanent residents of the city aged 18 or older would be granted a HK$10,000 ($1,289) cash handout as part of a HK$120 billion budget. The Hong Kong Monetary Authority has also reduced interest rates, following the Federal Reserve.