Note that the HKD is pegged to the USD. The Hong Kong Monetary Authority (HKMA) maintains the rate with the target set at 7.800.
Today, the Hong Kong markets are closed in observance of the Labor Day.
The US economy is experiencing the worst crisis since the Great Depression. Hong Kong is affected as well, even though China is reopening businesses.
The hub’s riot police are now anticipating planned protests by pro-democracy groups who are against the restrictions on gatherings during the pandemic. Last year, Hong Kong hosted violent protests that lasted for months. The demonstrations damaged the city’s reputation, affecting tourism and other sectors.
Activists are now hoping to use the May Day and the weekend to organize small protests even though the government doesn’t allow gatherings of more than four people in public spaces.
However, protesters might choose to keep the 1.5m distance and walk in small groups of four.
The South China Morning Post reported that about 3,000 riot police is ready to use rubber bullets and tear gas.
HK’s Economy Facing Worst Recession Ever
Besides the potential social unrest, Hong Kong’s economy might go through a more severe recession than thought. The city’s finance chief Paul Chan Mo-po said that the gross domestic product (GDP) might shrink by 4% to 7% in 2020 due to the coronavirus pandemic.
The financial secretary previously shared a more optimistic picture, anticipated a contraction of up to 1.5% or even growth by up to 05%. However, Chan Mo-po now expects the worst recession ever. He told lawmakers:
“The magnitude of Hong Kong’s economic recession in the first quarter could be worse than 2008’s global economic tsunami, or the impact of the Asian financial crisis [in 1997-98]. Hong Kong’s economic performance will inevitably be worse than expected.”
In the US, Commerce Department said yesterday that consumer spending, which accounts for over 65% of the country’s economic activity, tumbled a record 7.5% in March. Economists surveyed by Reuters expected a decline by 5.0%.