HONG KONG -- Hong Kong's slumping economy will shrink further in the first half of 2009, the territory's leader said Monday, as new data showed an increase in unemployment.
Brokers talk on phone at a brokerage in Hong Kong Thursday, Jan. 15, 2009. Hong Kong's slumping economy will shrink further in the first half of 2009, the territory's leader said Monday, as new data showed an increase in unemployment. [Agencies]
The economy, already in recession, probably contracted again in the fourth quarter and is expected to continue shrinking in the next six months, Chief Executive Donald Tsang said. Whether the local economy recovers thereafter hinges on the effectiveness of various government measures around the world.
"We have a long and difficult road ahead of us in terms of economic recovery," Tsang said at a financial forum in Hong Kong.
Hong Kong's economy slid into recession in 2008 for the first time in five years as it contracted in the third quarter.
Gross domestic product fell by 0.5 percent in the July-September quarter on a seasonally adjusted basis, marking the second consecutive quarter of contraction after the economy shrank 1.4 recent in the second quarter.
Tsang's dour outlook was reinforced by new figures released Monday showing the territory's unemployment rate rose to 4.1 percent in the October-December period, up from 3.8 percent during the September-November period, according Hong Kong's Census and Statistics Department.
Sectors suffering the brunt of job losses were decoration and maintenance, restaurants, import or export trades, transport and manufacturing. The unemployment rate is at its highest since the May-July period in 2007.
Tsang suggested the government would help create more than 60,000 new jobs this year, mostly by fast-tracking infrastructure projects, to cope with the downturn.
With local consumption withering amid the global recession, Hong Kong's economy could contract at rate of 3 percent for all of 2009, investment bank Goldman Sachs said in research note Monday.
Meanwhile, the unemployment rate could jump to 6.5 percent by 2010 as companies focused on finance and business, trade services, and retail cut back.
"The three main engines driving the labor market boom in the past few years ... are coming to a halt," Goldman said.