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Following is the transcript (English part) of a stand up media session given by the Financial Secretary, Mr Antony Leung, at the West wing lobby of the Central Government Offices today (February 21):

Financial Secretary : As expected by many people, the unemployment rate in Hong Kong has gone up quite a bit last month. This is obviously the result of the worldwide slow-down in economy coupled with the 911 tragedy and the economic restructuring in Hong Kong. Clearly, we have the New Year and the Lunar New Year factor, meaning a lot of employers would choose to lay off people around this particular period of time. We are watching the situation very carefully. Obviously the unemployment rate is a lagging indicator, so while the economy has in some point of time been improved with the recovery in the external economy, the unemployment rate would continue to go up in the immediate period. So we are watching the situation very carefully.

The other thing I would like to comment on is the report on the structural deficit of the Government fiscal situation. I am sure you have attended the press conference hosted by the Secretary for the Treasury. As you can see, we have a structural deficit in Hong Kong but the SAR Government is confident and is determined to close the budget deficit over a medium period of time. So I hope that our citizens will not be overly worried about the situation.

Question: You are repeatedly saying that you are confident and are going to solve the deficit problem, but how?

Financial Secretary: I would encourage you to listen to my budget speech on March 6, which is only a few weeks away.

Question: How will the unemployment problem go?

Financial Secretary: As I said, the unemployment indicator is a lagging indicator. In a way it somehow stays behind the performance of the economy. The Hong Kong economy, being a very open economy, is being affected by a number of factors. One of the important ones is really the performance of our major markets. There are signs that our major markets including the United States are in a way so called bottoming out. Obviously nobody can tell how soon and how robust the recovery will be, but since we believe that these major markets will bottom out and hopefully recover sometime this year, it'll bring positive benefits to the Hong Kong economy. So in the short term we'll continue to see unemployment facing upward pressure, but I can't really tell you for sure how long and also how high would unemployment go.

(Please also refer to the Chinese portion of the transcript.)

End/Thursday, February 21, 2002

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