Bloomberg News

Hong Kong’s Economy May Contract on Exports, John Tsang Says

February 13, 2012

(Updates with press secretary’s comment in eighth paragraph.)

Feb. 13 (Bloomberg) -- Hong Kong’s economy may shrink this quarter if exports fail to improve amid faltering global growth, Financial Secretary John Tsang said.

“I see a difficult year ahead for the global economy,” Tsang said in a transcript of a radio broadcast, posted on a government website yesterday. “We may even see negative growth in the first quarter of this year if exports fail to pick up.”

In a sign of the toll that weakness in global demand is taking on Asian economies, Japan today reported a fourth-quarter contraction. China’s exports and imports fell for the first time in more than two years in January, partly because of the disruption of a weeklong Lunar New Year holiday, the government said last week.

“We are expecting the hit from slackening export demand to hit Hong Kong the hardest in the first quarter,” said Donna Kwok, an economist at HSBC Holdings Plc in Hong Kong. A quarter- over-quarter contraction is “possible,” she said.

The benchmark Hang Seng Index closed 0.5 percent higher today after Greek lawmakers approved austerity measures to secure a bailout.

Tax Rebates

Tsang pledged Feb. 1 an HK$80 billion ($10.3 billion) boost to growth in the fiscal year starting in April, with measures including tax rebates, waivers on homeowner taxes and aid for small businesses. Gross domestic product may rise 1 percent to 3 percent in 2012, down from 5 percent last year, the government estimates.

Chief Executive Donald Tsang said last month that he has never been as scared about the global economic outlook. “Nobody’s immune. You need decisive action,” he said in Davos, Switzerland.

The financial secretary didn’t specify whether any contraction would be year-over-year or quarter-over-quarter. In an e-mail, his press secretary, Patrick Wong, said he believed he meant the former.

The city’s economy grew 0.3 percent in the fourth quarter from the previous three months.

--With assistance from Marco Lui in Hong Kong. Editors: Paul Panckhurst, Stephanie Phang

To contact the reporter on this story: Sophie Leung in Hong Kong at sleung59@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net


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