Abacus | Typhoon Mangkhut: hey Carrie Lam, a day off for Hong Kong made economic sense
Strange as it might seem, allowing most workers to down tools for a day would have subtracted nothing from Hong Kong’s economic output. And a full-scale clean-up could even have added to GDP. Here’s how
Hong Kong government head Carrie Lam has drawn flak over the past week for failing to order non-essential workers to take the day off on Monday to allow for a clean-up following Typhoon Mangkhut. Most commentators suspected Lam was concerned about the territory’s economy. They thought she was worried a day off would mean the inevitable loss of a day’s economic output, which would knock 1.6 per cent off Hong Kong’s gross domestic product in the third quarter.
This reasoning is flawed. Strange as it might seem, allowing most workers a day off would not have subtracted anything from the city’s economic output. And launching a full-scale clean-up could even have added to its gross domestic product (GDP).
Both those assertions seem counter-intuitive, so let’s examine them in detail.
It is relatively straightforward to confirm that an additional day off following last weekend’s storm would have had a negligible impact on the economic data. All we have to do is look at the historical data.
Over the past 50 years, Hong Kong has been hit by 74 typhoons severe enough to cause the government’s observatory to hoist a signal eight warning or higher, shutting down almost all economic activity in Hong Kong, often for a full working day. And of those 74 storms, 56 have struck the city in the third quarter of the year. By comparison, 10 have hit in the second quarter, and eight in the fourth quarter.
On average, between 1968 and 2017, the observatory hoisted typhoon signal eight or higher for 15 hours during the third quarter of each year. Allowing for nighttime storms, and the disruption as things get back to normal, that equates to almost a full working day lost to typhoons in each July-September period over that time.