Hong Kong Joins Asia’s Climb Out of Recession

"Hong Kong Joins Asia’s Climb Out of Recession | AboutHK.Com - more information about HK"

BETTINA WASSENER Hong Kong climbed out of recession in the second quarter, joining a rising number of economies in Asia and some in Europe reporting surprisingly buoyant growth as the global downturn moderates. Heavily reliant on trade and banking, the Hong Kong economy lurched into a recession when the financial world convulsed and Western demand for exports plummeted after the Lehman Brothers collapse 11 months ago. But Hong Kong’s economy grew by a seasonally adjusted 3.3 percent in the second quarter from the first quarter, more than analysts had expected, adding to evidence that the recovery was solidifying in much of Asia, according to data published Friday. China, Singapore and South Korea have reported rebounds during the April-to-June period. On Thursday, Germany and France said their economies had grown slightly during the quarter, defying analysts’ expectations for a small decline. In the United States, the Federal Reserve made some of its most upbeat comments in months during this past week, saying the economy was leveling out as consumer spending and financial markets stabilized. The stabilization also appears to be extending to Japan. Economists polled by Reuters expect statistics due Monday to show that the Japanese economy grew 1 percent in the April-to-June quarter, after contractions of 3.8 percent and 3.6 percent in the previous two quarters. Economists at Merrill Lynch commented Friday in a note about the Hong Kong data: “The strong number underscores one of our key points right now: Postcrisis recoveries in Asia usually surprise on the upside.” Asia’s relative health is the result of its banks’ being relatively untouched by the turmoil in the United States and European financial systems. Aggressive government stimulus measures have also helped pave the way for a more rapid recovery than elsewhere. Hong Kong in particular benefits from its links to mainland China, where powerful stimulus measures are bolstering growth, said Enoch Fung, a Hong Kong economist at Goldman Sachs. Goldman’s economists expect the Chinese economy to grow 9.4 percent this year. The bank expects Hong Kong to contract 3 percent this year, but to grow 5 percent in 2010, Mr. Fung said. Still, analysts caution that recovery is likely to remain fragile, as exports, a major growth engine for most Asian economies, will not recover rapidly until the United States and European economies improve. “For a small, open economy like Hong Kong, a sustained and solid recovery still hinges on a visible improvement in the external environment,” the government said Friday. Although Hong Kong’s economy grew in April to June from the first three months of 2009, it shrank 3.8 percent compared with the same period last year. For the full year, the government now expects a contraction of between 3.5 and 4.5 percent, rather than the 5.5 to 6.5 percent it had previously forecast. Comments Please login to post comments or replies.