HK Sees Some 'Green Shoots' in Weak Economy

Hong Kong said on Monday that it saw some "green shoots" in its recession-hit economy and that second-quarter GDP data should be better than the first quarter, although economic recovery was still some way off.

Vincent Yu / AP

Financial Secretary John Tsang told legislators that in the past one to two months, exports and consumption had been declining less and the unemployment rate had stopped rising.

"We can call this the 'green shoots' (of economic recovery) if you like," Tsang said. "I expect that in the second quarter the decline in GDP year-on-year will be less than in the first quarter," he said.

The economy shrank 7.8 percent in the first quarter from a year ago, its worst performance since the Asian financial crisis, as exports plunged by more than 20 percent, the biggest decline since the 1950s, and consumers reined in spending.

However, the government said Hong Kong had held up better than some neighboring economies such as Singapore and that it might revise its full-year GDP forecast next month when it releases Q2 GDP data. 

Exports in the past two months have declined less sharply and the unemployment rate in May stayed at 5.3 percent, a near four-year high, after rising steadily since August.

The government forecasts the economy will shrink by up to 6.5 percent this year, but its chief economist, Helen Chan, hinted the decline may be smaller following HK$87.6 billion (US$11.2 billion) in government relief measures which were creating jobs.

A still weak U.S. economy is likely to continue to weigh on Hong Kong exports, but signs that China's economy is rebounding should help the territory, the government said.

Chan said China was now importing more raw materials. "In the next few quarters that should translate into finished goods, which will be re-exported through Hong Kong," Chan told legislators.

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