Hong Kong’s economic recession showed signs of easing in the third quarter, slumping 3.5 percent compared with the same period a year ago but much slower than the 9 percent decline seen in the second quarter, the special administrative region (SAR) government said on Friday.

On a quarter-to-quarter analysis, the economy rebounded 2.8 percent in the third quarter, ending the run of quarterly declines in the preceding five quarters.

The Hong Kong SAR government believes that the city’s economy is showing signs of bottoming out and is generally improving.

The economic improvement in the third quarter is partly attributed to the increasing internal and external demand.

The steady expansion of Chinese mainland economy has improved the external trading environment of Hong Kong. Meanwhile, the local economic situation has gradually improved with the easing of the COVID-19 epidemic at the end of the third quarter, said Andrew Au Sik-hung, Government Economist of Hong Kong.

According to the data released by the SAR Census and Statistics Department on Friday, Hong Kong’s exports of goods achieved a positive growth of 3.9 percent in the third quarter. The overall exports of services dropped by 34.6 percent, narrowed by 11 percentage points compared with that in the second quarter.

During the same period, private consumption expenditures posted a year-on-year decline of 8.2 percent compared with 14.2 percent in the last quarter, and public consumption expenditures continued to rise by 7.0 percent on a yearly basis. Although Hong Kong’s investment continued to fall in the third quarter, the 11.1 percent drop was lower than the 21.4 percent drop recorded in the second quarter.

There has been an increase in people’s flow in Hong Kong now and more people start to go to restaurants and shopping malls, said Paul Chan Mo-po, Financial Secretary of the Hong Kong SAR government.

However, the labor market was still and will remain under great pressure. The unemployment rate rose 6.4 percent in the third quarter, the highest in nearly 16 years.

The retail, accommodation and catering industries directly affected by the epidemic had a combined unemployment rate of 11.7 percent.

In October, the airline company Cathay Pacific announced that it was laying off about 6,000 employees, the biggest ever job cuts in Hong Kong.

The SAR government has rolled out many rescue measures. “We hope the economy will continue to improve so that the job market will pick up steam,” said Law Chi-kwong, Hong Kong Secretary for Labor and Welfare.

The Hong Kong SAR Chief Executive Carrie Lam said that Hong Kong needs the support of the central government to integrate the city into the overall development of the country, especially into the new national dual-cycle development pattern relying on both domestic and international economic cycles with the domestic cycle being the mainstay.

Chan Mo-po said that in the future, Hong Kong enterprises can actively participate in the domestic market of the country, make its own contributions to building a national scientific and technological innovation ecosystem with its unique scientific research strengths and play a unique role in the new dual-circle development pattern with its worldwide business network and professional services.

Matthew Cheung Kin-chung, Chief Secretary for Administration of Hong Kong SAR, said that Hong Kong can also obtain development momentum by actively participating in the Belt & Road Initiative and conducting businesses in the Guangdong-Hong Kong-Macao Greater Bay Area.

As a global financial center, Hong Kong has always been an important platform for Chinese mainland enterprises to obtain financing overseas and for foreign capital to enter the Chinese mainland.

Despite the COVID-19 pandemic, the return of a large number of Chinese mainland stocks still set off a wave of boom in Hong Kong’s financial market, driving the Hong Kong dollar exchange rate continuing to strengthen.

Christopher Hui Ching-yu, Hong Kong’s Secretary for Financial Services and the Treasury, said that with the support of the country, Hong Kong’s financial sector will offer unlimited opportunities.

The International Monetary Fund (IMF) has projected in its latest report that China’s GDP will grow by 1.9 percent in 2020, the only major economy to achieve growth this year.

On Friday, the Hong Kong SAR government forecast that Hong Kong’s economy will shrink 6.1 percent this year, revised from a projection in August of a 6 to 8 percent contraction.