21 May 2020
Posted in Construction
Hong Kong construction industry to contract by 9.2% as COVID-19 worsens the slump due to civil unrest, says GlobalData
The Hong Kong construction industry was in dire straits in 2019 as political unrest disrupted the market. The COVID-19 induced economic weakness is now expected to further exacerbate the gloomy scenario, with output expected to contract by 9.2% in 2020, says GlobalData, a leading data and analytics company.
Tourism and exports are two main pillars of the Hong Kong economy. Subsequent to the COVID-19 outbreak, tourist arrivals to Hong Kong declined by 80.9% year on year in the first three months of 2020, with the arrivals in March alone falling by a massive 98.6% year on year. The country experienced a double blow to the economy as the export of goods too declined by 9.7% in the first three months of 2020.
Dhananjay Sharma, Construction Analyst at GlobalData comments: “The commercial sector is facing a high risk of a sharp downturn due to the outbreak of the coronavirus. The market’s investment over the short-term is expected to be affected by declining tourist arrivals in the country. The retail sales in the country is also facing the impact of the pandemic, with sales declining by 42% year on year in March 2020.”
The pandemic situation in Hong Kong has been subsiding for weeks. According to Hong Kong’s Center for Health Protection (CHP), as of 12 May, no new local confirmed cases of COVID-19 have been recorded for 23 consecutive days. However, though the domestic economy has opened, but strong linkage to the global economy is likely to affect Hong Kong’s economy despite the government’s package of support worth HKD120bn (US$15.4bn), including cash handouts and tax breaks.
Sharma concludes: “Although construction works could gradually resume pace, with the government easing social distancing measures, investments on major infrastructure projects could be affected due to funding issues as well as the fear of the resurgence of COVID-19 or due to the continuation of last year’s civil unrest.”