Hong Kong (CNN Business) Months of protests in Hong Kong that forced shops to close, paralyzed public transportation and scared off tourists have left the city's economy in worse shape than feared.

Hong Kong plunged into recession in the third quarter, according to official data released Thursday. The economy shrank 3.2% during the three months to September, compared to the previous quarter. That's a sharp slowdown from the 0.5% contraction recorded in the second quarter, and much worse than economists had expected.

With no immediate resolution to the city's political crisis on the cards, Hong Kong's first recession in a decade could extend into the new year. Compared to the previous year, the economy shrank 2.9% in the third quarter.

"Frankly, there is no room for optimism," embattled Hong Kong Chief Executive Carrie Lam said at a business event on Thursday, ahead of the preliminary growth figures. Hong Kong will release revised GDP figures next month.

As a major trading hub, Hong Kong was already hurting from the US-China trade war and China's slowing growth. Five months of mass demonstrations is now pushing the city toward an economic crisis.