The Hong Kong government slashed its growth outlook for 2019 as the Asian financial hub took hits from massive pro-democracy protests and the police response, as well as global trade tensions.
The real GDP growth forecast for the full year was revised down to a range of 0%-1% from an estimate of 2%-3% in May.
"The recent social incidents, if continued, will cause further serious disruptions to certain economic activities, in particular inbound tourism and consumption-related economic activities will be further hard hit," government economist Andrew Au said in a news release.
Demonstrations sparked by a now-suspended extradition bill in June have continued and morphed into protests regarding wider governance issues. Protests disrupted hundreds of flights at the city's international airport earlier in the week.
In the second quarter, Hong Kong's real GDP fell 0.4% on a quarter-on-quarter basis, following 1.3% growth in the prior three-month period. Exports of goods weakened further and weighed on growth, while domestic demand remained sluggish, the government said.
"The economic conditions in the first half of the year were the weakest since the recession in 2009," Au said, warning that growth in exports could further deteriorate in the coming months amid uncertainty over the U.S.-China trade conflict.
On an annual basis, Hong Kong's economy expanded 0.5% in the second quarter, down from 0.6% growth in the first quarter.
Separately, Moody's revised its outlook for Hong Kong's growth to 0.5% in 2019 and 1.0% in 2020. The rating agency said the protests will weaken consumer sentiment and hurt the retail, tourism and real estate sectors.