BLOOMBERG – Hong Kong’s Omicron outbreak is dealing a double whammy to businesses.
Not only will new social distancing curbs crimp revenue for retailers and restaurants, a slashing of flights they rely on to bring everything from Australian cherries to wagyu beef into the financial hub is also set to raise costs and boost inflation. Cathay Pacific Airways, the city’s most connected airline, has cancelled hundreds of flights.
Cargo capacity could drop below one-fifth of pre-pandemic levels. Logistics costs may surge by 40 per cent within three weeks. Importers expect the price of fruit to rise by 10 per cent.
In pursuit of a zero-Covid-19 strategy, Hong Kong has shut gyms and cinemas. At the same time, an already fractured supply chain for a city that imports most of its goods has reached a breaking point, with businesses seeing delays in deliveries of staples such as berries and yoghurt and of premium seafood and cheeses.
The threat of an Omicron-driven surge has spooked Hong Kong, where the vaccination rate is among the lowest for developed economies. Though officials have found only dozens of cases in the community so far, they are tracking at least three separate transmission chains.
