Hong Kong Likely Entered Recession in Q3:

Bloomberg,

8 November, 2011

Hong Kong’s economy, a barometer of global growth, probably sunk into a recession in the third quarter after a second consecutive quarterly contraction, said Daiwa Capital Markets Ltd.

The economy likely shrunk 1.5 percent in the three months ended September from the previous three months, Kevin Lai, an economist at Daiwa, wrote in a report dated yesterday. Daiwa predicted year-on-year growth of 3 percent for the quarter, while the median estimate of 21 analysts in a Bloomberg news survey was for a 4.2 percent expansion.

Exports from the city, a trading gateway between China and the world, declined in September for the first time in almost two years as elevated unemployment in the U.S. and Europe’s debt crisis hurt the global economy. Hong Kong’s Chief Executive Donald Tsang yesterday said there’s a 50 percent chance of a global recession in the coming year.

“We expect domestic demand, service exports and a start of the destocking process to lead the quarter-on-quarter contraction,” Daiwa’s Lai said in his report. Real consumption has shown “clear signs of fatigue,” weighed down by stock- market losses and “severe” inflation pressures, Lai wrote.

The city’s benchmark Hang Seng Index (HSI) plunged 21 percent in the third quarter, the biggest loss since the three months ended September 2001. Inflation accelerated to 5.8 percent in September as housing rental costs increased.

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