Don't get your hopes high on V-shape recovery, says ChanTop News | Maisy Mok 30 Mar 2020
Financial Secretary Paul Chan Mo-po warns the public not to expect a speedy rebound - like after the 2003 SARS outbreak - once the pandemic ends.
Chan also foresees a sharp decline in the retail sale index which will be released tomorrow. As the pandemic continues, the second quarter will be challenging and the global economy will further weaken, he said.
"Even though many people have suffered from the pandemic, with the release of more data in the following days, the market will inevitably experience a greater psychological shock and the global economy will contract in the first half of the year," Chan wrote on his blog.
Recent restrictions on public gatherings have made matters worse for struggling small and medium enterprises, he continued, creating more pressure for layoffs and closures.
The government is planning on more relief measures, including a second boost for the Anti-Epidemic Fund to support industries and employees in difficulties, Chan said.
Meanwhile, Benjamin Chau Kai-leung, deputy executive director of Hong Kong Trade Development Council, said the exporter confidence level in the first quarter had fallen to a record low since 2006.
The latest decline of the export index - at a reading of 16 - will affect export trade severely, Chau said. It is expected that the export value this year would fall more than the previous projection of a 2 percent decline.
Although retail sales around the world have fallen, Chau said he is confident that sales will rebound once the pandemic is over as mainland consumers will release their "oppressed" purchasing power.
He added that enterprises should consider moving production lines to outside of the mainland once the pandemic is over.
To help enterprises, the council launched several digital initiatives, including the month-long Spring Virtual Expo from Wednesday.
Around 22,000 suppliers will be on the exhibition platform, said Chau. The platform will focus on four themes - technology, gifts and housewares, lifestyle, and fashion and beauty.
Separately, James Lau, secretary for Financial Services and the Treasury, said Hong Kong is facing the most difficult time since 1997.
Lau said the SAR government will continue to proactively "promote the development of Hong Kong's insurance industry as well as other sectors of the financial services industry," and preserve the city "as an international financial center."