Third wave deters economic recovery

Local | Wallis Wang 27 Jul 2020

The third wave of the Covid-19 pandemic may slow down the local economy's recovery, Financial Secretary Paul Chan Mo-po conceded in his blog yesterday as he appealed again to landlords to cut rent and businesses to be more socially responsible.

"Businesses and economic activities, which had been showing signs of recovery, were hit by the resurgence of coronavirus," Chan said.

"In addition, the sharp deterioration of political and economic relations between China and the US, as well as rising geopolitical tensions, have also added uncertainties to the global economic outlook."

Chan said Hong Kong's economy may take longer than expected to recover and appealed to landlords to cut rents and persevere with retailers, restaurants and small and medium-sized enterprises.

According to Chan, Hong Kong's economic performance in the second quarter remained poor, but the contraction appeared to be moderating slightly and stabilizing.

Chan said retail sales fell 33.9 percent in May compared with a year earlier, but this was lower than the 44 percent drop in March and the 37.5 percent drop in April.

June figures are still unknown, but Chan estimated the decline slowed down further because of the improvement in the coronavirus situation in Hong Kong.

But this month's surge in local virus infections and restrictions on many businesses had curbed the economic recovery.

Chan said the most urgent task for the government is to stop the spread of the virus and ensure citizens' health and safety.

"The government has imposed a series of anti-epidemic measures, which caused inconvenience for residents and put pressure on enterprises and retail stores," Chan said.

"But we must make the choice between short-term pain and long-term gain and we hope to bring security and stability for the public in the long run."

Meanwhile, economist Francis Lui Ting-ming, former head of the economics department at Hong Kong University of Science and Technology, said Hong Kong will be under considerable impact as the US escalates its confrontation with China.

Lui said in a radio show yesterday that Hong Kong has already become a part of Washington's "geopolitical war" against China. If the US fails to control the pandemic, he added, it will continue to confront China, which will also affect Hong Kong.

Elsewhere, Secretary for Labour and Welfare Law Chi-kwong wrote in his blog yesterday that the details of the second phase of the Support Employment Scheme will be announced next month in hopes of alleviating unemployment in the three months from September.

Law said some people have asked him how to scientifically prove the scheme can alleviate the jobless rate, and explained that the government needs to conduct "randomized controlled trials" to scientifically ensure its effectiveness, but it would be too late when all the experiments are complete.

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