Hong Kong: Economic Report 2020

Executive Summary

With the beginning of COVID-19 in January 2020, the city shut the borders to China. Ongoing travel restrictions have caused harm to the economy, especially but not exclusively to the travel industry which has decreased by 42.4%. As of 25 May 2021, Hong Kong has reported 11’834 cases and 210 deaths.

Hong Kong’s GDP contracted in the year 2020 by 6.1%, the largest annual decline on record, while the unemployment rate rose to 5.9% from 2.9% in 2019. 2020 was also Hong Kong’s first time to register two consecutive years of negative growth, after a 1.2% fall in 2019. Exports of goods fell mildly while export of financial services expanded moderately thanks to active cross-border financial and fund-raising activities.

The government introduced relief measures intended to help Hong Kong businesses survive the dramatic effect of COVID-19 and to assist the city’s economy to recover from the pandemic. Measures include providing financing support in the form of SME Financing Guarantee Scheme, the Employment Support Scheme as well as introducing reduction in profits tax, income tax, property tax, specific-industries subsidies.

China’s top legislative body imposed a sweeping national security law on Hong Kong in June 2020, and laid down a resolution to shake up the city’s political system in May 2021 to make sure patriots would firmly dominate the city’s legislature and other key political institutions.

Hong Kong economy is forecast to grow by 3.5% to 5.5% in 2021. Consumer price inflation is forecast at 1% in 2021. The tourism industry may take longer to fully recover.

Based on statistics of the Federal Customs Administration exports from Switzerland to Hong Kong without art pieces and precious metals decreased by 34.4 %. Imports from Hong Kong to Switzerland shrank 4.1%. This gloomy picture would look very different if art pieces and precious metals were included. It would result in an increase in trade volume. Trade in precious metals is very volatile and represents the biggest item in trade in both ways: 51.6% of total Swiss exports and 96.4% of total imports from Hong Kong.

Direct investments from Switzerland amounted to USD12 billion in 2019, an increase by 3.4%, with a share of 0.6% of the total FDIs in Hong Kong. According to the Hong Kong Census and Statistics Department, Hong Kong’s imports of services from Switzerland reached to USD 0.5 billion (0.7% of total imports of services) in 2019. Switzerland ranked 19th largest supplier in this category whereas Hong Kong’s exports of services to Switzerland amounted to USD 1 billion (1% of total exports of services) in 2019.

Hong Kong hopes to benefit from Mainland China’s 14th Five Year Plan, the Regional Comprehensive Economic Partnership Agreement, the Guangdong-Hong Kong-Macao Greater Bay Area, and the Belt and Road Initiative.