Hong Kong chief executive Carrie Lam said earlier this month, the city's economy had slipped into a "technical recession" after many months of violent protests.
Bloomberg's new report, comprised of several interviews and retail data points of the city, offers a leading view of economic turmoil in the city that could lead to a severe financial crisis.
Kirio Zhou, a resident of mainland China, spoke with Bloomberg and said the retail business in Hong Kong is on the brink of collapse. Rooms at the most high-end hotels, like Marco Polo Hongkong in Tsim Sha Tsui, are going for $72 per night, a 75% discount versus last year.
"I thought it was a per-person price at first," said the 23-year-old lawyer, who saw Hong Kong's small but expensive accommodations as a big pain point. "But now really cool places are offered at a low price. I hope this will continue."
Paul Luciw, an internet entrepreneur, said the hotel traffic in Hong Kong has dropped. He was able, according to Bloomberg, barter a hotel room at a luxury hotel in the city for ad space on his website.
I just left there. It was crazy riots every night, had fires under my Hilton Hotel. Go somewhere else. My biggest concern is they closed down the airport last week. They are taking the lead from Hong Kong protests. I don’t believe it will end soon pic.twitter.com/0BOZFg0B0J— phugh (@phugh7) October 23, 2019
Hong Kong's Aug. retail sales were awful, the worst on record., and the accounts from Zhou and Luciw -- indicate just how desperate Hong Kong businesses are to survive.
"It's absolutely life and death for us," said Douglas Young, co-founder of Goods Of Desire, or G.O.D, a lifestyle and fashion store-chain operator in Hong Kong, in an interview with Bloomberg Television on Wednesday. "At the moment we're calculating whether or not it's cheaper for us to just fold or to continue, it's that serious."
Retail sales in Aug. plunged 23% Y/Y, worse than the 21.48% drop in Sept. 1998, as violent protests continue to cause mini-economic shocks in shopping districts and malls.
As a result, Prada SpA, Ralph Lauren Corp., and Levi Strauss & Co. have said store sales are quickly slipping into year-end with no end in sight on resolving the protests.
"Retail sales will likely remain in the doldrums in the near term, as the worsened economic outlook and local protests involving violence continue to weigh on consumer sentiment and inbound tourism," a government spokesman said in Sept.
Jewelry stores are typical shops that mainland Chinese would visit, have seen sales collapse by 50% in Aug Y/Y.
We even reported that depressed jewelry sales in the city had contributed to a collapse of Israel's diamond industry. This is an indication that the Hong Kong economic crisis is spreading throughout the world.
Anyone who wants to travel to Hong Kong this week, departing from Washington, D.C., airports can experience at least a 50% savings on roundtrip plane tickets at the moment because air travel to Hong Kong remains depressed.
Arrivals to Hong Kong plunged 39% to 3.56 million in Aug Y/Y. Hotel data showed occupancy levels have fallen by a third to 66% in Aug., Hong Kong Tourism Board data showed.
Local businesses are cutting back on their workforce as approximately 77% of all hotel workers have just been asked to go on leave without pay.
"Hotels were expecting things to pick up in October and November. Obviously, that has not happened," said Luciw. "We are being approached almost daily by hotel groups looking to advertise."
Raymond Yeung, the chief Greater China economist with Australia & New Zealand Banking Group Ltd. in Hong Kong, told Bloomberg that hotel price discounts are mostly "protest-driven."
"Are we going to see business travelers come to Hong Kong? Are we going to see all the exhibitions resumed?" Yeung said, adding that several major conferences in the city have been canceled.
Hong Kong's economic sag could be a bellwether for the global economy ahead of 2020. And as we've mentioned, protests are erupting across the world, not just in Hong Kong. These social unrests are creating mini-economic shocks in local economies, and all of these shocks are happening at the same time as the global economy could be entering a period of vulnerability. This means the world might be one economic shock away from recession.