Hong Kong is facing an unprecedented recession that will likely eclipse that of 2003, when the SARS outbreak occurred. MWYO released a report today, titled “Youth Unemployment in Hong Kong under COVID-19: A Forecasting Exercise and Analysis”. Hong Kong’s overall unemployment rate in the fourth quarter of 2020 is expected to reach 5.9%, nearly doubling the fourth quarter of 2019 level. Under the recession, young people aged 15 to 29 are even more vulnerable to job loss. If the adverse effects of the COVID-19 pandemic persist, the overall unemployment rate may even reach a historic high, surpassing its peak at 8.5% during the 2003 SARS outbreak.
As Hong Kong’s economy had already been experiencing a contraction over the latter half of 2019, with many industries facing a significant decline in business receipts, the ongoing COVID-19 pandemic will only exacerbate such effects. The retail, accommodation and food services sector will likely be affected the most, seeing a sizable climb in its unemployment rate. The import/export and wholesale trade sector will experience a knock-on effect.
MWYO mapped out three recovery scenarios of the local economy: (i) the best-case scenario (a V-shaped recovery), (ii) the base-case scenario (a U-shaped recovery) and (iii) the worst-case scenario (a protracted U-shaped recovery). Based on these three scenarios, MWYO made predictions on the overall and youth unemployment rates. Assuming that the virus spread is contained by the second quarter of 2020, MWYO expects the overall unemployment rate to peak by the fourth quarter of 2020, with the youth unemployment rate higher than that of their older counterparts. In the base-case scenario, which assumes that the local economy reaches its lowest point in the fourth quarter of 2020 and begins its recovery, the unemployment rate of persons aged 15 to 19 will rise from 10.2% in the fourth quarter of 2019 to 21.3% in the fourth quarter of 2020, with a corresponding increase in the unemployed population by around 3,100; the unemployment rate of persons aged 20 to 29 will rise from 5.8% to 8.7% over the same period, with a corresponding increase in the unemployed population by around 19,500.