HK expects negative GDP growth

By Hui Ching-hoo (China Daily)
Updated: 2009-01-20 07:58

HONG KONG: The Hong Kong economy may see a negative growth in the first half of this year with a rebound likely in the second half, according to Donald Tsang, chief executive, Hong Kong Special Administrative Region.

Addressing the Asian Financial Forum here yesterday, Tsang admitted that the local economy has been sliding into a negative growth from the fourth quarter of last year and said the trend would continue in the first half also.

Hong Kong GDP growth slowed from 4.2 percent in the second quarter to 1.7 percent in the third quarter last year.

Tsang said the anticipated recovery in the second half hinges largely on the external economy and the effectiveness of the Hong Kong government's stimulus package.

In spite of the gloomy global economy, Tsang remained optimistic on the region's outlook. He added that the economic fundamentals have in no way been diminished by the financial turmoil.

The region's strong human resources would provide the key to a quick recovery, he said. At the same time he also urged Hong Kong to expand its cooperation with Macao and Guangdong province, as laid out in the recently approved Pearl River Delta region development plan.

Tsang also said Hong Kong could utilize its strength and its status as the world's freest economy to deepen its renminbi yuan settlement business and also explore new avenues like Islamic finance in the future.

To cope with the climbing unemployment rate, Tsang pledged that the government would take the lead to create more jobs to alleviate the impact of the economic downturn.

"I am confident that the government can create over 60,000 jobs this year," he said adding that most of the jobs would be in infrastructure and construction.

Tsang had earlier expressed concerns that the labor market may significantly deteriorate in the fourth quarter.

The Secretary for Financial Services and the Treasury KC Chan said he remains satisfied with the performance of Hong Kong's financial monitoring system during the financial tsunami. But he said the system still has room to improve, in particular in the supervision on retail sales of banks.

Speaking about Hong Kong Exchanges and Clearing and Securities Futures Commission's (SFC) report, Chan said he would take into consideration the suggestions regarding an extension of the blackout period and issuance of quarterly reports before drafting relevant policies.

He added investigations conducted by the HK Monetary Authority and SFC on the minibond sale of Lehman Brothers have made good progress.

(China Daily 01/20/2009 page13)