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(Updates with HKMA chief executive’s comments in second paragraph.)
Oct. 20 (Bloomberg) -- The world economy is facing the “threat of profound and traumatic disruption,” said Norman Chan, chief executive of the Hong Kong Monetary Authority.
“The breakdown of monetary, fiscal and market disciplines has contributed to the deepness and severity of the latest crisis in the advanced economies,” Chan said in a speech posted on the de facto central bank’s website.
Chan’s comments echoed those of Donald Tsang, the top government leader in Hong Kong, who said he sees a high chance of a world recession, according to his spokeswoman Suzanne Lee. Asian stocks fell today amid uncertainty about European bailout- fund talks and as U.S. companies grew more pessimistic about the outlook for the world’s largest economy.
The city’s Financial Secretary John Tsang said this week the prospect of weaker growth in the U.S. and the European debt crisis have already hurt Hong Kong’s economy by weakening export demand.
Morgan Stanley and Daiwa Capital Markets say Hong Kong may have fallen into a recession in the third quarter, after the economy shrank 0.5 percent in the April-to-June period from the previous quarter.
Financial instability will likely slow the Chinese yuan’s pace of appreciation, Donald Tsang said. His comments were earlier reported by the Wall Street Journal.
--With assistance from Kana Nishizawa in Hong Kong. Editors: Brendan Murray, Michael Heath
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