Editorial | Economic damage increases pressure for solution to the unrest

The 23 per cent fall in August compared with the same month last year is the steepest on record, even counting the Asian financial crisis in 1998. More worrying, much worse now seems inevitable, threatening serious economic damage including heavy job losses that will not be quickly reversed, especially if political uncertainty lingers.

If the latest reactive measures such as banning face masks fail to turn the tide against protest violence on the streets, the government will be under intense pressure to do whatever it takes to end the unrest.

Officials blamed the bad retail sales figures for August on severe disruption of inbound tourism and consumption-related activities. The unrest has compounded the weakening of consumer sentiment attributed to the United States-China trade war. The Hong Kong Retail Management Association warns that the retail figures for the current month could be dire.

Shortened business hours, temporary or permanent shop closures and unpaid forced holidays for employees have become a familiar pattern. The damage is spreading, as evidenced by the Tourism Board’s cancellation of its hugely popular wine-and-dine festival at the end of the month and the annual Hong Kong cyclothon.

Retail association chairwoman Annie Tse Yau On-yee says retailers closed between 30 per cent and 80 per cent of stores in some areas at different times on National Day last Tuesday.

At a time when the retail sector is usually shifting into pre-Christmas promotion, the potential damage of negative sentiment is incalculable. The knock-on effect of budget cuts will spread through the advertising and media sectors, hotels and catering, logistics, shipping, the financial sector and so on. The first to be affected as usual will be small-to-medium enterprises, the unsung heroes of job creation.

A large wave of business failures and bankruptcies and job destruction will only lead to further instability. Whatever measures are adopted to combat street violence, the government must not rule out a political solution, hand in hand with supporting measures to cushion the damage to the economy and help vulnerable sectors get back on their feet.