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Hong Kong falls into recession

Image    Hong Kong slipped into recession in the third quarter as the global economic slowdown took its toll on the financial hub, government figures showed yesterday.

Hong Kong’s gross domestic product fell 0.5 percent from the previous quarter on a seasonally adjusted basis, following a fall of 1.4 percent in the second quarter, the Census and Statistics Department said in a statement.
“The growth of the Hong Kong economy slowed notably further in the third quarter, as the external sector slackened amid the faltering global demand,” government economist Helen Chan said in the statement. “And as domestic demand towards the end of the quarter was severely hit by the outbreak of the global financial tsunami that caused significant jitters in the local asset markets.” The standard definition for recession is two
consecutive quarters of falling GDP. Hong Kong joins Singapore, Germany, New Zealand and Italy in reporting a technical recession as the global slowdown bites into economies across the world. Hong Kong cut its full-year 2008 GDP forecast to between 3 and 3.5 percent from the previous 4 and 5 percent but kept its forecast for inflation at 4.2 percent for the full year. Last year, Hong Kong’s economy grew 6.4 percent.“The whole world has changed radically since September and we expect the recession will deepen,” said Hang Seng Bank economist Irina Fan, according to Dow Jones Newswires. “Hong Kong can’t expect to recover until
2010 at the earliest,” she said. The government said merchandise exports were hit hard, giving their worst performance since the first quarter of 2002, as demand from the United States and other markets dropped away. Consumption, one of the most solid performers in the city’s shopping-mad economy, held firm in July and August but slackened distinctly in September, the statement said.