(Bloomberg) -- Hong Kong Financial Secretary Paul Chan expects the city's economy to contract as much as 7% this year amid the global coronavirus pandemic, much worse than his original projection when presenting the budget in February.
The economy will contract between 4% and 7%, Chan said in the Legislative Council, according to an online transcript. The advance first-quarter gross domestic product reading due May 4 may be worse than what the city had experienced during the global financial crisis and the Asian financial turmoil, Chan said.
The city's economy fell a record 8.3% in the third quarter of 1998 and contracted 7.8% in the first quarter of 2009, the two worst quarterly readings for the measure in year-over-year data going back to 1974, according to the Census and Statistics Department Hong Kong.
Chan had forecast 2020 GDP in a range of -1.5% to 0.5% in his Feb. 26 budget.
Hong Kong has been mired in recession since the second half of last year as months of political unrest drove declines in retail, tourism and services even before the virus. Social distancing measures to combat the coronavirus have only made things worse.
Iris Pang, greater China chief economist with ING Bank NV in Hong Kong, forecasts a 10% economic contraction for the first quarter. She also sees unemployment rising as high as 10% this year.
“Hong Kong's tourism, retail and catering businesses have been double hit by protests and Covid-19,” she said. The threat of a resumption of last year's protests once the virus fades would exert even further pressure on the economy.
“The torn economy may not be able to face more shop and restaurant closures after Covid,” she said.
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