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Saturday 11 October 2008
Fallout Tipped to Hit HK Early in New Year
Hong Kong’s economy could begin contracting as early as this quarter although much of the fallout from the global financial meltdown would not hit city until next year, economists warned yesterday. PDF
Hong Kong’s economy could begin contracting as early as this quarter although much of the fallout from the global financial meltdown would not hit city until next year, economists warned yesterday.
“We see the possibility of negative growth in the fourth quarter of this year and the first quarter of next year, when Hong Kong will slide into a recession,” City University economics professor Stephen Cheung Yan-leung said. “I’m not optimistic.”
He said small- and medium-sized enterprises would face difficulties amid a slumping economy, which may lead to layoffs.
Financial Secretary John Tsang Chun-wah said the troubles at garment manufacturer U-Right International Holdings, which had to sack nearly half its local workforce and shut 20 stores, were just the beginning of the financial “tsunami”.
That sentiment was echoed by DBS Bank senior investment strategist Daniel Chan Po-ming, who warned the situation would get worse. “We will face a slump in exports, as Hong Kong re-exports many goods to Europe and the US, as well as a shrinking financial market,” Mr Chan said.
In its latest economic review last week, Bank of China (Hong Kong) warned there would be no growth, or even an economic contraction, in the fourth quarter.
But Terence Chong Tai-leung, associate professor of economics at Chinese University, said the economy might still eke out some growth in the fourth quarter, or at least not fall backwards, because of export orders placed earlier in the year.
Total exports grew just 1.9 per cent year on year in August, down from 11.1 per cent in July.
Hong Kong Air Cargo Terminals reported an 8 per cent year-on-year drop in the volume of cargo handled last month, to 221,882 tonnes. In the third quarter, there was a 4.1 per cent decline, to 661,505 tonnes.
With trade suffering, Hong Kong needed to do more to shore up the economy, such as boosting inbound tourism from new or emerging markets, Professor Chong said. “All four quarters next year may record negative growth compared to this year,” he said.
Hang Seng Bank’s latest Hong Kong Economic Monitor report contains a gloomy outlook for external trade and domestic demand.
“Looking ahead, the prospects for employment are dim,” it said.
“There are likely to be substantial layoffs in the financial sector after the fallout of major US and European financial giants.
“The financial tsunami is likely to push the US and European economies into a deep downturn or even recession, prolonging the tough times for Hong Kong’s trade sector - the industry that employs the most workers.
“Major real estate agencies have also started to cut headcount as property transactions turn more sluggish.”
The bank revised its economic growth forecast for this year down to 4 per cent, from 4.3 per cent. For next year, it cut its forecast to 2 per cent, from 3.3 per cent.
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Fallout Tipped to Hit HK Early in New Year
Dennis Eng and Paggie Leung
11 October 2008
Hong Kong’s economy could begin contracting as early as this quarter although much of the fallout from the global financial meltdown would not hit city until next year, economists warned yesterday.
“We see the possibility of negative growth in the fourth quarter of this year and the first quarter of next year, when Hong Kong will slide into a recession,” City University economics professor Stephen Cheung Yan-leung said. “I’m not optimistic.”
He said small- and medium-sized enterprises would face difficulties amid a slumping economy, which may lead to layoffs.
Financial Secretary John Tsang Chun-wah said the troubles at garment manufacturer U-Right International Holdings, which had to sack nearly half its local workforce and shut 20 stores, were just the beginning of the financial “tsunami”.
That sentiment was echoed by DBS Bank senior investment strategist Daniel Chan Po-ming, who warned the situation would get worse. “We will face a slump in exports, as Hong Kong re-exports many goods to Europe and the US, as well as a shrinking financial market,” Mr Chan said.
In its latest economic review last week, Bank of China (Hong Kong) warned there would be no growth, or even an economic contraction, in the fourth quarter.
But Terence Chong Tai-leung, associate professor of economics at Chinese University, said the economy might still eke out some growth in the fourth quarter, or at least not fall backwards, because of export orders placed earlier in the year.
Total exports grew just 1.9 per cent year on year in August, down from 11.1 per cent in July.
Hong Kong Air Cargo Terminals reported an 8 per cent year-on-year drop in the volume of cargo handled last month, to 221,882 tonnes. In the third quarter, there was a 4.1 per cent decline, to 661,505 tonnes.
With trade suffering, Hong Kong needed to do more to shore up the economy, such as boosting inbound tourism from new or emerging markets, Professor Chong said. “All four quarters next year may record negative growth compared to this year,” he said.
Hang Seng Bank’s latest Hong Kong Economic Monitor report contains a gloomy outlook for external trade and domestic demand.
“Looking ahead, the prospects for employment are dim,” it said.
“There are likely to be substantial layoffs in the financial sector after the fallout of major US and European financial giants.
“The financial tsunami is likely to push the US and European economies into a deep downturn or even recession, prolonging the tough times for Hong Kong’s trade sector - the industry that employs the most workers.
“Major real estate agencies have also started to cut headcount as property transactions turn more sluggish.”
The bank revised its economic growth forecast for this year down to 4 per cent, from 4.3 per cent. For next year, it cut its forecast to 2 per cent, from 3.3 per cent.
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