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Hong Kong protests have started an economic crisis: Key financial global center enters recession

Hong Kong has entered recession for the first time in a decade as ongoing protests impair business activity. The Retail sector has been one of the worst affected by discontent. Consumer spending has dropped considerably; almost all retail sectors are registering declines in sale value and volumes. The luxury goods market has taken the worst hit with sales of watches, jewelry and other luxury items dropping by 47.4%. Clothing and apparel, as well as medicine and cosmetic markets, are also reporting considerable declines in sales. As sales volumes fall and the economic cost of the protests increases, retailers will be forced to close stores or move business elsewhere to avoid further damage. Such eventualities would result in the diminishment of the local retail sector which could have long lasting effects on the economy.

Tourism has taken a huge hit as a result of the protests. The total number of visitors has fallen dramatically in recent months and is expected to worsen as protests continue. Tourists are increasingly likely to perceive Hong Kong as an unsafe destination as a result of escalating violence. Conflict between citizens and police and continued disruption to transportation networks across the region, including Hong Kong airport and The Mass Transit Railway, have worsened matters further. Mainland China represents that largest visitor population in Hong Kong. However visitor numbers from China fell 42.3% in August 2019 in comparison to the same period in 2018. Protests could have long term implications for tourism from the mainland due in part to demands for political separation from mainland China, potentially making mainlanders feel unwelcomed or unsafe in Hong Kong and discouraging future visits.

The unproductivity of businesses in Hong Kong during the protests could encourage businesses to relocate. Many companies have experienced drops in share prices due to activities in Hong Kong and some organizations are finding it challenging to attract investors discouraged by the risk associated with doing business in a period of social unrest. Singapore could be a popular destination for relocation.