Hong Kong's economy shrank by 9% from a year earlier in the latest quarter, hurt by the coronavirus pandemic and facing more potential damage from the loss of US trade privileges due to a security law imposed by Beijing.
The performance reported Wednesday for the three months ending in June was an improvement over the previous quarter's 9.1% contraction, the biggest since the government began reporting such data in the 1970s.
Hong Kong, a center for trade, finance and tourism, already was struggling before the coronavirus prompted the government to impose travel curbs and restrictions on business.
Tourist arrivals fell following protests that began in June 2019 over a proposed extradition law and expanded to include demands for greater democracy and other grievances.
The territory also faces further trouble after Washington withdrew its special trade status in response to Beijing's imposition of a security law that will tighten control over the former British colony.
The Trump administration said Hong Kong would no longer be treated as an autonomous trading area.
That could result in more scrutiny of goods bound to and from the United States, eroding Hong Kong's competitive edge against mainland Chinese and other major Asian ports.
The Hong Kong government has launched stimulus programs including most recently a handout of 10,000 Hong Kong dollars ($1,290) to all adults.
Hopes for a quick economic rebound have been tempered by a recent surge in new virus infections.