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Hong Kong has been weathering months-long protests that have driven the economy into a recession, before the coronavirus crisis hit. Photo: AFP

Hong Kong unemployment rate expected to hit 2003 levels at up to 5 per cent under Sars, as Wuhan coronavirus deals new blow to protest-hit economy and tourism

  • Labour and welfare minister warns figure could be 4 to 5 per cent this year, up from existing 3.3 per cent
  • City grinding to a standstill with major tourist spots closed, school suspended and staff told to work from home

The unfolding crisis from the Wuhan coronavirus outbreak has dealt yet another blow to Hong Kong’s fragile economy, with authorities warning of a higher unemployment rate comparable to that of 2003 under the pall of Sars.

Secretary for Labour and Welfare Law Chi-kwong said on Tuesday that the unemployment rate would hit 4 to 5 per cent this year from the existing 3.3 per cent, with more shops expected to go out of business after Lunar New Year.

He said his estimate was similar to that of 2003 when the severe acute respiratory syndrome wreaked havoc on the city. “The trend is worrying,” Law added. “The priority is to avoid the coronavirus from spreading across the community.”

Hong Kong slashes cross-border travel with mainland China amid virus outbreak

Hong Kong is battling against the contagious disease, with the epicentre of the outbreak in the Chinese city of Wuhan. More than 100 people have died from the virus in mainland China, with more than 4,500 infected as of Tuesday. As of 8pm, the number of confirmed infections in Hong Kong remained at eight.

Chief Executive Carrie Lam Cheng Yuet-ngor launched fresh measures to prevent a wider outbreak in the city by suspending visas to individual travellers from the mainland, who accounted for half of the city’s total arrivals from across the border in December.

Secretary for Labour and Welfare Law Chi-kwong. Photo: Felix Wong

In November, there were 1.92 million mainland visitors to Hong Kong.

Economist have projected that the disease would exacerbate the city’s economic woes caused by months-long anti-government protests and the ongoing US-China trade war.

Amid the health scare, Hong Kong has been grinding to a standstill. Tourist hotspots such as Ocean Park, Disneyland Resort and the Ngong Ping 360 cable car were closed, with school holidays extended, while all public leisure facilities were shut down, and court hearings cancelled. Civil servants were asked to work from home, with many companies and banks also announcing similar policies.

Economists said Hong Kong’s economic health came under a fresh threat at the beginning of 2020 as the city had slipped into a recession in the third quarter last year.

“For the next two months, the economy will be very bad,” Ryan Lam Chun-wang, head of research at Shanghai Commercial Bank, said. “The entertainment, retail, tourism, food and beverage and hotel and hospitality sectors will be hit hardest.”

He forecast that the city’s gross domestic product in the first quarter would be lower than the 0.6 per cent growth mark in the same period last year.

Tourism is one of the city’s four pillar industries, with the others being financial services, trading and logistics, as well as professional services.

Masked pedestrians in Causeway Bay. Photo: Dickson Lee

Tourism accounted for about 257,000 jobs and generated 4.5 per cent of GDP in 2018.

Paul Chan Chi-yuen, co-founder of tour operator Walk in Hong Kong, has handled about 100 cancellations mainly from the United States so far this week.

“These are premium spenders who were planning to stay overnight,” he said. “The tourism industry should be prepared to bear the sacrifice if we want to win the war against the epidemic.”

Amid protests, city’s economy expected to shrink 1.3 per cent for the year

Michael Tien Puk-sun, a lawmaker and owner of about 40 fashion stores under the G2000 chain in Hong Kong, said retailers including himself were already hit badly by the social unrest.

Tien supported the government’s decision to restrict mainlanders from visiting the city temporarily, even though it would hurt business further.

He said he could see the light at the end of the tunnel, if the city managed to keep the disease at bay for several months.

“Since the protests started in June last year, mainland visitor numbers have been falling. Now we have the outbreak of the Wuhan coronavirus, which has left even fewer mainland spenders coming to Hong Kong.

“This means retailers should rethink their strategies by not relying on them,” Tien said. He added that his G2000 stores focused on non-Chinese tourists and local shoppers.

A family stands at the closed gates of Disneyland. Photo: Edmond So

Tourism lawmaker Yiu Si-wing, also a director at tour agency China Travel Service (Hong Kong), said hoteliers who were originally expecting a rebound in occupancy and room rates during the Lunar New Year holiday were disappointed.

“Many hotels at best were 40 per cent occupied, and at worst 30 per cent, while room rates were down 50 per cent from the same time last year,” he said.

For the first three days of the Lunar New Year, between January 25 and 27, the number of inbound visitors slumped 61 per cent from the same holiday period last year, while outbound numbers tumbled 64.6 per cent, according to the Immigration Department.

Traveller numbers at Hong Kong airport in biggest drop since 2009

Meanwhile, long queues were seen in a supermarket at Yoho Mall in Yuen Long, where dozens of Hongkongers emptied multiple shelves amid panic buying.

Shoppers in surgical masks targeted frozen meat and dumplings, instant noodles and other food supplies which could be stored for a longer time. Some were also left disappointed after finding disinfectants and alcohol wipes were sold out.

A staff member likened the flow of shoppers to periods in which Hong Kong braced for monster storms.

“But the fact is that a typhoon only comes around for about one day, and the coronavirus will take longer,” she said.

A Dairy Farm spokeswoman said the group’s supermarkets such as Wellcome, saw a spike in demand for fresh produce and household cleaning and hygiene products. She said the group was restocking round the clock.

A spokeswoman for AS Watson, which runs more than 260 supermarkets, including ParknShop, said operations remained normal.

Additional reporting by Jeffie Lam