Hong Kong joined the growing list of economies that have slipped into recession as growth in the third quarter was hit by softening global demand for goods and services, prompting the government to cut its economic growth forecast for 2008. Hong Kong's gross domestic product fell 0.5 percent from the previous quarter on a seasonally adjusted basis, following a fall of 1.4 percent in the second quarter, according to government data released Friday. Economists predict this economic downturn will be deep as the world struggles to recover from the financial crisis. They said Hong Kong is now in a technical recession as the economy has contracted on a quarterly basis for two consecutive quarters, and expect that it will worsen next year and possibly last until 2010. “This is only the beginning of the economic aftershock, and the territory will likely continue to suffer from tremors in the coming quarters,” DBS economist Connie Tse said. “The local economy can no longer rely on household spending and private investments to fuel growth,” Tse said. “The melt down in the equity market and declining job security have left business and consumer confidence flagging.” The Hong Kong government also cut its full-year 2008 GDP outlook to 3 percent to 3.5 percent from the previous 4 percent to 5 percent forecast, but kept its expectations for the consumer price index unchanged at 4.2 percent for the full year. Last year, Hong Kong's economy grew 6.4 percent. The government said the economy was hit hard in September as the “outbreak of the global financial tsunami” battered the local stock market and hurt consumption at the same time weak external demand slowed exports.
