Citi cuts Hong Kong GDP growth forecast for fourth time this year, says retail and tourism could take months to recover

Citigroup said it could take some time for Hong Kong’s retail and tourism sectors to recover from three months of protests and civil unrest in the city, as the bank lowered its growth forecast for the city’s economy for a fourth time this year.

The American bank cut its forecast for Hong Kong’s gross domestic product growth to 0.6 per cent for 2019 and 1.4 per cent for 2020, citing the “visible damage” caused to the city’s retail and tourism sectors.

“We think the retail picture likely worsened in August, after July recorded the weakest retail sales reading in 3.5 years,” Adrienne Lui, a Citi economist, said in a research note published late on Thursday. “We are bearish on retail sales for the rest of the year and expect a slow recovery in local consumption. Revival of tourism receipts will take time as [Hong Kong] rebuilds its reputation as a tourist travelling destination.”

On Wednesday, Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor said she would formally withdraw an extradition bill that would have made it easier to send criminal suspects to mainland China for trial.

The bill sparked mass protests in the city beginning in June, but several organisers said simply withdrawing the bill was not enough and the government must do more to address social, economic and political issues in the city.

The dim outlook by Citi comes after Hong Kong’s government last month cut its own outlook for the city’s economic growth to between 0 per cent and 1 per cent in 2019, and several banks have said growth could slow dramatically or contract this year.