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Source: www.asiaecon.org |


Like most economies, Hong Kong has struggled with growing unemployment and falling demand. However, there are now signs of economic recovery beginning to show.

Like most economies, Hong Kong has struggled with growing unemployment and falling demand. However, there are now signs of economic recovery beginning to show.

Jobs: The number of jobs available decreased in the first quarter by 0.04 percent. However, the majority of companies surveyed admitted that they planned to hire more workers in the second quarter.

Business: Hong Kong is a place where private business has thrived, since individuals could work, produce, consume and invest freely. Hong Kong has been ranked number in the 2009 Index of Economic Freedom, earning 90 out of 100.

Recently, the Federation of Hong Kong Industries said that in a survey, most manufacturers reported that they were increasing their orders, which is a good indicator of a company’s recognition of increasing demand.

Exports: Hong Kong’s exports fell 18.2 percent in April compared to a year earlier as reported by the Census and Statistics Bureau.

According to Paul Tang, a senior economist at Bank of East Asia, the drop in export numbers should narrow further in the coming months. “We are seeing reports that manufacturers are getting more orders. In the next 3-5 months we should see a remarkable improvement,” he added.

Kevin Lai, a senior economist at Daiwa Institute of Research says: ““Exports look better. External demand is stabilizing so that’s a good sign… the fact that Hong Kong exports have come back a bit is an improvement.”

GDP: Gross Domestic Product shrank by approximately 7.8 percent compared to the same time last year.

According to James McCormack, managing director of Sovereign Ratings, “The worst [for the Hong Kong economy] has come but its growth will remain slow.”

The government predicts that GDP will decline anywhere from 5.5 percent to 6.5 percent, due to a large decrease in exports, dwindling consumer spending, unstable employment and the swine flu outbreak. This is a considerably large decline than the first forecast, which estimated a 2-3 percent decline.

Merrill Lynch, in contrast, “maintains its 2009 forecast of a 3.1 percent contraction” and raised the city’s economic growth prediction to 3.8 percent next year, an increase of 90 basis points from the previous prediction.

Merrill Lynch chief Asian economist TJ Bond said: “Hong Kong is likely to struggle against the medium-term headwind of weak global demand… but we expect a sharp upturn in the second half of the year.”

Government Response: The government unveiled a $16.8 Hong Kong billion dollar stimulus package that included tax-relief measures, loan guarantees for companies and a temporary end to a variety of government fees.

The stimulus package will help banks and the property market, since the Hong Kong government will basically hand out cash and give banks money “for nothing.”

Chief Executive Donald Tsang Yam- kuen has said that he believes the stimulus plan, along with improved exports and employment, will help the economy work its way back to growth.

Source: www.asiaecon.org |

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