Five months of violent protests in Hong Kong are beginning to affect the former British territory’s economic growth. The previous two quarters show the city entering a period of contraction or shrinkage, in the economy, resulting in a recession, according to Reuters. The effects of this recession has been hitting small to medium-sized businesses the hardest, forcing many to shut down for days at a time. While the government has attempted to alleviate the suffering businesses, many of the policies will not do enough to help.
One of the government’s plans includes easing ways to loan money to small businesses, reports Bloomberg. However, protests are still continuing and dissatisfaction with the current leader is extremely high. According to the Hong Kong Free Press, Chief Executive Carrie Lam’s popularity has dropped to the lowest ever recorded for a chief executive, 20.2 percentage points out of 100. This coincides with a growing lack of faith in the government, especially the police, and the rising violence and volatility of the Hong Kong protests.
Much of the economic shrinkage can be attributed to the increasing violence on the streets because of the protests and damage to the city from clashes between police and protesters, resulting in fear from moderates and a lack of tourists. Tourism to Hong Kong has fallen since September, which registered around a 30 percent drop in visitors; the drop is now down to 50 percent, according to the South China Morning Post. In addition, local citizens not involved in the protests are more reluctant to go outside over the fear of being swept up in the protests and violence.
Commenting on the economic effect of the protests to the South China Morning Post, ING Bank Greater China economist Iris Pang said that she doesn’t go outside for takeout anymore, stating “I cannot see any light at the end of the tunnel yet.” According to Reuters, businesses, and banks, especially those owned by mainland Chinese, are repeatedly targeted by the protesters, who torch and vandalize them.
The Mass Transit Railway (MTR) Metro has also had to shut down for repairs from damage to stations and is now closing to prevent more protesters from gathering. While the protests have gotten more violent and more encompassing of life in Hong Kong, the Financial Secretary Paul Chan recently posted on his blog “Let citizens return to normal life, let industry and commerce operate normally, and create more space for rational dialogue,” calling for an end to the protests.