A Paradigm Shift Towards a Green and Sustainable Finance Center

10 An Inventory of Hong Kong’s Recent Economic Fluctuations 2.1 The Fluctuations in the Economy When an economy is shrinking for two quarters in a row, it is typically considered a technical recession. For example, during the global financial crisis in 2008, Hong Kong’s GDP declined for four consecutive quarters with the highest drop of 3.4%, starting from the 2 nd quarter of 2008; and for consecutive quarters year on year with the highest drop of 7.8% since the 4 th quarter in 2008. Since 2019, Hong Kong’s GDP has experienced another round of significant fluctuations (Figure 1). It declined for five consecutive quarters from the 2 nd quarter of 2019, with the largest drop rate of 5.5%; and starting from the 3 rd quarter of 2019, it fell for six consecutive quarters year on year, which came with a maximum decline of 9.1%. This recent economic downturn in Hong Kong represents a new wave of technical recession. Although Hong Kong’s economy overall showed a notable drop in 2019, the decline narrowed in late 2020 with effective pandemic control and the resumption of import demands from the Mainland market. In the 1 st quarter of 2021, the GDP increased by 7.9% from a year-on-year perspective. The strong recovery in 2021 was followed by some volatility in 2022. Owning to a combination of internal and external factors, such as the fifth wave of COVID-19, the Russian- Ukrainian War, high inflation in the United States and Europe, and a continued global trade downturn. Hong Kong’s GDP dropped again by 4.5% from a year earlier in the 3 rd quarter of 2022. Then, 2023 showed a generally positive growing trend with small downturns in Q2 and Q3. Nevertheless, the prospect for Hong Kong’s economy is filled with uncertainty. Figure 1: Changes in Hong Kong’s GDP (Source: Based on data from the Census and Statics Department of Hong Kong) Year-on-year % change Quarter-to-quarter % change in the seasonally adjusted GDP 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -6.0% -7.0% -8.0% -9.0% -10.0% Q1 Q3 2008 Q1 Q3 2012 Q1 Q3 2013 Q1 Q3 2014 Q1 Q3 2015 Q1 Q3 2016 Q1 Q3 2017 Q1 Q3 2018 Q1 Q3 2019 Q1 Q3 2020 Q1 Q3 2021 Q1 Q3 2022 Q1 Q3 2011 Q1 Q3 2010 Q1 Q3 2009 Q1 Q3 2023