Chapter 3
The Economy
Hong Kong's economy registered the sharpest annual decline on record in 2020 as the COVID-19 pandemic dealt a heavy blow to global and local economic activities. It saw a substantial year-on-year contraction in the first half of the year, before improving somewhat in the second half partly thanks to a revival in goods exports and active financial markets. The labour market deteriorated while overall inflationary pressures receded.
Gross Domestic Product (GDP) contracted 6.1 per cent in real terms for 2020 as a whole, the sharpest annual decline on record, following the 1.7 per cent decline in 2019. In terms of the quarterly profile, real GDP fell sharply by 9.1 per cent year on year in the first quarter and 9.0 per cent in the second quarter, before showing narrowed declines of 3.6 per cent in the third quarter and 2.8 per cent in the fourth quarter (chart 1).
Chart 1
Quarterly Gross Domestic Product
(year-on-year rate of change)
Per cent
14
Real GDP
12
10
8
10
6
4
2
NOŅ
-2
-4
-6
-8
-10
Nominal GDP
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
The Hong Kong economy saw the sharpest annual contraction on record in 2020.
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