City’s jobless rate expected to hit fresh high this year
Source: South China Morning Post | Published: January 29, 2020
The unfolding crisis from the Wuhan coronavirus outbreak has dealt another blow to Hong Kong’s fragile economy, with authorities warning of a higher unemployment rate comparable to that of 2003 under the pall of severe acute respiratory syndrome (Sars).
Secretary for Labour and Welfare Law Chi-kwong yesterday said the unemployment rate would hit 4 to 5 per cent this year from the existing 3.3 per cent, with more shops expected to go out of business after Lunar New Year.
He said his estimate was similar to that of 2003 when Sars wreaked havoc on the city. “The trend is worrying,” Law said. “The priority is to avoid the coronavirus from spreading across the community.”
Chief Executive Carrie Lam Cheng Yuet-ngor launched fresh measures to prevent a wider outbreak in the city by suspending visas to individual travellers from the mainland, who accounted for half of the city’s total arrivals from across the border in December.
In November, there were 1.92 million mainland visitors to Hong Kong.
Economists have projected that the disease would exacerbate the city’s economic woes left by months-long anti-government protests and the ongoing US-China trade war.
Amid the health scare, Hong Kong has been grinding to a standstill. Tourist hotspots Ocean Park and Disneyland and the Ngong Ping 360 cable car were closed, with school holidays extended and court hearings cancelled.
Economists said Hong Kong’s economic health had come under a fresh threat at the beginning of 2020 as the city had slipped into a recession in the third quarter of last year.
“For the next two months, the economy will be very bad,” Ryan Lam Chun-wang, head of research at Shanghai Commercial Bank, said. “The entertainment, retail, tourism, food and beverage and hotel and hospitality sectors will be hit hardest.”
He forecast the city’s gross domestic product (GDP) in the first quarter would be lower than the 0.6 per cent growth mark in the same period last year.
Tourism is one of the city’s four pillar industries, with the others being financial services, trading and logistics, as well as professional services.
Tourism accounted for about 257,000 jobs and generated 4.5 per cent of GDP in 2018.
Paul Chan Chi-yuen, co-founder of tour operator Walk in Hong Kong, has had about 100 cancellations this week, mainly from the United States.
“These are premium spenders who were planning to stay overnight,” Chan said.
“The tourism industry should be prepared to bear the sacrifice if we want to win the war against the epidemic.”
Michael Tien Puk-sun, a lawmaker and owner of the G2000 fashion chain, said retailers were already hit badly by the social unrest.
Tien supported the government’s decision to restrict mainlanders from visiting the city temporarily, even though it would hurt business further.
However, he said he could see a light at the end of the tunnel if the city managed to keep the disease at bay over the next few months.
“Since the protests started in June last year, mainland visitor numbers have been falling. Now we have the outbreak of the Wuhan coronavirus, which has left even fewer mainland spenders coming to Hong Kong.
“This means retailers should rethink their strategies by not relying on them,” Tien said.
He added that his G2000 stores focused on non-Chinese tourists and local shoppers.
Tourism lawmaker Yiu Si-wing, also a director at tour agency China Travel Service (Hong Kong), said hoteliers who were originally expecting a rebound in occupancy and room rates during the Lunar New Year holiday were disappointed.
“Many hotels at best were 40 per cent occupied, and at worst 30 per cent, while room rates were down 50 per cent from the same time last year,” he said.
Between Saturday and Monday, the first three days of Lunar New Year, the number of inbound visitors slumped 61 per cent from the same holiday period last year, while outbound numbers tumbled 64.6 per cent, according to the Immigration Department.
Additional reporting by Jeffie Lam