Of nine economists in a Bloomberg News survey, Lai came closest to predicting a 0.5 percent contraction in the city�s economy in the second quarter. Only two of the analysts expected gross domestic product to decline from the previous three months. The government released the data Aug. 12.Some economists define a global recession as a slowdown in combined global growth under 2%. That is a near-given.
�Global demand is really weak and we expect the U.S. and Europe will see a sharp slowdown, or near-zero growth, next year,� Lai said in a phone interview in the city today. �A recession is a reality for Hong Kong.�
An 11 percent decline in Hong Kong�s merchandise exports in the second quarter from the previous three months highlights the weakness, Lai said. In a note, he described the economy as the world�s �most externally-driven� and said that a slump has �grave implications.�
The world economy is �entering a new danger zone� and international policy makers need to take steps to restore confidence, World Bank President Robert Zoellick said yesterday in Sydney. A U.S. debt-rating downgrade and a widening European debt crisis triggered a global rout of equities.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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