We normally associate an economic downturn with all sorts of bad things: unemployment, decrease in income, and a lower standard of living. But in Hong Kong, a little slump should do us some good, and here’s why.
At the moment, there’s one major issue that is affecting almost everyone: the rising cost of living. Though inflation is a natural by-product of economic growth, it’s definitely not good. Housing prices are soaring, the cost of basic necessities is rising, and your average street-side vendor is being replaced by big brands.
Take Sha Tin New Town Plaza, for example, the mall I visit out of necessity, rather than any desire to buy over-priced clothes. Over the past few years, humble bookstores, family-run eateries, and small shops have been replaced by luxury brands such as Burberry, Coach, and Rolex. Things have become so ridiculous that even McDonald’s and Marks and Spencer – two international symbols of capitalism – have been forced out of the mall. What used to be an ordinary man’s go-to place for ordinary goods has now become a stronghold for the filthy rich.
This, of course, is happening while wages fail to keep up with inflation. Hence, life for your average Joe is becoming increasingly miserable.
But fortunately for the most of us, things appear to be getting better. The business cycle dictates that whatever goes up must come down, and our economy is beginning that descent. Average home prices have fallen 11 per cent since last September, according to the US financial services company, Standard & Poor’s.
With sluggish economic growth on the mainland, some may say that things don’t look too bright for Hong Kong this year.
So why should an economic slump benefit us? Well, as average income falls, the demand for luxury goods should fall, which would in turn cause luxury brands to close some of their shops. Meanwhile, the demand for ordinary, cheaper goods should increase, perhaps bringing smaller businesses back into play. Take that, New Town Plaza schmucks.
Likewise, as the ball starts rolling downhill, more and more investors will choose to sell their properties. The sudden increase in supply will lead to a fall in prices, as demand has remained the same. This, hopefully, will make flats much more affordable for the middle class.
Yes, there is going to be some unemployment and quite a few angry home owners, but for the majority of Hongkongers, a limited decline should be good news. Our economy has been overheating in the past few years; a slump means the market is correcting itself. Let’s just hope that it’s enough to bring McDonald’s back to the Sha Tin plaza.