HK economics - recovery distorted by base effect

Good 2021 growth figures, but...

After the atrocious contractions of 2020 thanks to lockdowns, recent forecasts on 2021 GDP have turned distinctly rosy, ranging from 3.3% to 4.2% and averaging 3.8% growth. 

However, given the traumatic falls of 2020, these growth figures may still not be enough to take us back to pre-lockdown levels, and the chart below demonstrates this disconnect due to base effect:

Chart 1 : YoY economic growth forecasts mask low base in 2020

 

The year-on-year growth in GDP (blue line above, extended by forecasts of 2021 represented by yellow line) may appear strong, but if we were to compare this year's performance to pre-lockdown levels, as represented by 2-year changes (red line) , normalcy will not return until Q1 22. The positive blip in the red line in Q3 21 is the result of a bad comparable Q3 19 when the street protests disrupted economic activities.

In fact, the current recession looks much more like the post-dot-com/SARS one in 2001-3 than the GFC episode in 2009-10, as the latter bounced back much faster. Given the shape of the current recovery, 2021 will remain below 2019 levels for sure, and probably 2022 as well.

Return to 2018 unlikely until 2023 at the earliest

So when is the most likely time we will see the economy return to pre-lockdown days? Perhaps not widely known, HK's economy actually peaked in 2018, and has been on a downtrend in 2019 (protests) and 2020 (lockdowns), this year's recovery is yet uncertain, as it depends on how quickly the govt reopens the economy to normal business.

Even assuming immediate opening, which most market forecasts probably factored in already, we are unlikely to see the economic level return to 2018 peak levels until 2023, as the arrows in the chart below suggest:

Chart 2 - Indexed GDPs suggest return to 2018 peak after 2022

If lockdowns are extended, or global travel opening were delayed, the 2023 recapturing of prior high becomes even less probable. As a reference to the last big recession - the 2000 peak was only recaptured in 2004; we reckon the 2018 peak will most likely be retaken in 2023 at the earliest, if the side effects of lockdowns/money printing/supply chain destruction do not stoke second order economic problems or worse political unrests before we get there.

 

More accidental deaths in HK than Covid, why the lockdown? 20210507

1. Is it worth shutting down society for so few deaths?

We have compared covid deaths to other forms of illnesses before, and illustrated how mild a cause of death it is in relation to so many other common illnesses (see <here>).

You may be surprised that, at a mere 0.026% death rate for the population in Hong Kong, covid's damage is even less than annual suicide deaths (4.8x of covid), within which, jumping to one's death caused 2.5x as many deaths as covid. What is more surprising is that deaths caused by accidental falls had 40% higher chance than covid! These shocking statistics are laid out in the chart below:

In summary, every year, almost 10 people die of non-disease related causes than from covid in the past year. To set these non-disease causes of death against disease causes in one picture, covid seems once more so completely undeserving of the overblown lockdowns we are seeing around the world - which must be leading to much higher suicide rates, amongst others which are in normal times 4.8x (in HK covid):

If pneumonia deaths are 45x covid, why have the society not locked down in our past 6,000 years of history? Even at only 60% level of death rate, surely driving cars should also be banned?

We also plotted the HK covid deaths by age over the past year (chart below), this shows clearly:
1) Most deaths happened in Jul-to-Aug and Dec-to-Jan period - a pattern that suggests we probably do not need to be locked down for most of the rest of the year?

2) The average age of death was around 80, slightly dropping to 76 by April 2021 - the most vulnerable are the elderly, then why is the rest of society shut down when so few suffered?

3) To reinforce above observation, only 6 deaths were of 50 years or younger, and 17 deaths below the age 60.

Again, all these prove that the severe lockdown policies imposed around the world is likely doing more harm than good to people.

below are our usual digest of third party writings on the lockdown phenomenon...

2. The Lockdown Paradigm Is Collapsing

A Jeffrey A. Tucker article explaining why lockdown is no longer an effective strategy against COVID-19 and why the lockdown idea is foolish - for example US states with almost no lockdowns seem to have lower death rates than most states with ultra harsh lockdowns - thereby destroying civil liberty as well as the economy:

 

 

3. RUSSELL BRAND about Vaccine Passport: "THE END OF FREEDOM & DEMOCRACY"

Russell Brand's video questioning vaccine passports and why this measure may grant more power to the state at the cost of the citizens.