Hong Kong economy shrinks in 2019 amid protests, trade war

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Copyright 2020 The Associated Press. All rights reserved.

An employee wears protective face mask at a restaurant in Hong Kong, Monday, Feb. 3, 2020. In Hong Kong, thousands of health care workers were threatening to go on strike Tuesday unless the government agrees to talks before a 6 p.m. Monday deadline. Hong Kong has recorded 14 cases of the virus and has cut flights and train and bus connections to the mainland, but a push is growing for the semi-autonomous Chinese city to close the border completely. (AP Photo/Vincent Yu)

HONG KONG – Hong Kong’s economy shrank last year for the first time since 2009, government data showed Monday, as the territory struggles with the impact of China's virus outbreak.

The economy of the Chinese territory of 7 million people, a major trading and financial center, contracted by 1.2% compared with 2018, the government said. That followed a 2.9% decline from a year earlier in the three months ending in December.

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Hong Kong already was struggling with its first recession in a decade when China's virus outbreak hit, prompting the territory and other governments to impose travel curbs that have disrupted business.

Trade was weak and protests that erupted in June over a proposed extradition law have depressed tourism and retailing.

The protests have been less intense and this year’s exports might rebound, but Hong Kong “isn’t out of the woods yet,” Julian Evans-Pritchard of Capital Economics said in a report.

“The coronavirus outbreak has appeared as a new headwind,” he said.

The government said earlier Hong Kong fell into recession after activity contracted by 2.8% in the three months ending in September. The government tried to shore up growth with tax cuts, higher social spending and other stimulus.

“The outlook for the Hong Kong economy in 2020 is subject to high uncertainties,” the government said in a statement.