Economic damage from Hong Kong protests will linger

Outlook

The protests have disrupted road traffic, air traffic, public transport and city-centre shopping and entertainment -- but the effect on business and consumer sentiment may be greater and longer-lived.

The impact from direct disruption will be concentrated, brief and highly unevenly distributed; the psychological effect on firm, household and government behaviour will be more enduring and diffuse.

The authorities’ attempts to address the grievances seen as underlying the protests will involve changes to economic policy, with the property sector a particular focus.

Impacts

• China is likely to exercise greater, but not necessarily overt, influence over Hong Kong henceforth.
• The protest movement will permanently damage confidence in Hong Kong’s political stability and the independence of the city’s institutions.
• Singapore may benefit in the longer term from foreign firms choosing it as their Asian base rather than Hong Kong.
• Hong Kong’s economy will benefit from more Chinese investment in the Greater Bay Area initiative linking it with China.