Figures released by the Hong Kong government show that the economy of the Special Administrative Region is now technically in recession.
On a seasonally adjusted quarter-to-quarter comparison, GDP fell by 0.5 percent in real terms in the third quarter, after a contraction of 1.4 percent in the second quarter, according to a November 14 press release.
The government attributed the poor showing of the economy to faltering global demand for Hong Kong’s exports and the effects of the "global financial tsunami" on local assets markets.
Year on year growth fell to 1.7 percent in the third quarter from 4.2 percent in the second quarter. The government slashed its full year growth forecast from between 4 to 5 percent to between 3 to 3.5 percent.
Merchandise exports had their worst performance since 2002 with sales to the US market faltering. Growth in service exports also tailed off, due mainly to a slowdown in financial services.
Domestic consumer confidence was badly hit by the sharp decline in the stock market and falling property prices. Compounding the problem is the prospect of a further rise in unemployment from the 3.4 percent rate recorded in the third quarter.
The government said economic conditions "will continue to restrain consumers' propensity to spend. Businesses are also likely to turn more cautious in making machinery and equipment acquisitions.”
Singapore has already posted two successive quarters of negative growth, and indicators to be released by Japan on Monday may show that Asia’s largest economy has joined Hong Kong and Singapore in recession.
(China.org.cn by John Sexton, November 17, 2008)
