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FS on economic situation in first quarter of 2009 (with photo / video)

     Following is the transcript of remarks (English portion) by the Financial Secretary, Mr John C Tsang, and the Government Economist, Mrs Helen Chan, at a press conference on the "Economic Situation in the First Quarter of 2009 and Updated GDP and Price Forecasts for 2009" at the Central Government Offices New Annexe today (May 15):

Financial Secretary: During the debate on the Second Reading of the Appropriation Bill 2009 in LegCo (Legislative Council) last month, I said that I would wait until the middle of this year before deciding on appropriate additional measures to deal with the current economic downturn.  I also pointed out that decisions on future measures to stimulate our economy would be based on the most up-to-date information.

     Today the Census and Statistics Department released economic data for the first quarter of 2009.  The figures indicate that the global economic crisis continues to impact heavily on our economy.

     In the first Quarter of this year, our economy registered a sharp year-on-year decline of 7.8 per cent.  This is the largest decline since the third quarter of 1998, during the Asian financial crisis.  In the fourth Quarter of last year, our GDP contracted by 2.6 per cent.

     I anticipate that Hong Kong・s economic situation in the second quarter will remain difficult.

     On the trade front, Hong Kong・s exports faced the double blow from a sharp plunge in global demand  and an acute fall-off in regional trade.  Total exports of goods dropped by 22.7 per cent in real terms in the first quarter compared to the same period last year.  This is the largest decline since 1954.

     The domestic sector of the economy has also been weak.  In the first quarter of 2009, private consumption expenditure fell by 5.5 per cent in real terms.  However, the decline on a quarter-to-quarter basis actually tapered.  This partly reflected the relative improvements in the local stock and property markets this year.  

     On the other hand, overall investment fell 12.6 per cent in the first quarter compared to the same period last year.  And, with our economy in recessionary phase, the unemployment rate climbed to 5.2 per cent in the first quarter.

     Clearly, the external economic environment has been far worse than expected at the beginning of this year.  This was reflected by the successive mark-downs of International Monetary Fund・s global growth forecasts for 2009 from 0.5 per cent in early January to minus 1.3 per cent last month.
     Given recent developments, I have revised downwards our full-year GDP forecast for 2009 to between minus 5.5 and minus 6.5 per cent in real terms.  The previous forecast was for a decline of between 2 and 3 per cent.

     We may be experiencing at this time the worst period of the crisis.  This challenging economic environment will continue to affect people throughout our community, but the economic situation should improve in the second half of the year.  I feel that it is now time for us to implement a new package of measures to relieve hardship, stimulate economic activity and assist those in need in order to tide us over this difficult period.  The Chief Executive indicated yesterday that we would push out this package of measures within a month・s time.

     The new round of measures will directly benefit the community.  We aim to secure the relevant funding approval before the recess of the current LegCo session.

     I will announce further details once this work is complete.

     Since the onset of the financial tsunami, Hong Kong people persevered and remained confident.  There is no need to be overly pessimistic about the latest economic indicators.  Hong Kong・s financial system remains sound and our economy is in relatively good shape compared to many others.

     Working together, I am confident that we will be able to ride out the storm.  Thank you very much.

Reporter: Many people have criticised that the middle-class people could not benefit from the Budget you released earlier this year, so just wonder what will be the focus of the new relief package. Will the middle-class people be missed out again? And also what・s your outlook for the economy in the second quarter now that our city is further hit by the swine flu scare? Thank you.

Financial Secretary: I don・t agree that the middle-class people did not get the benefit from the last Budget because many of the measures that I introduced in the last Budget were intended for the middle class and I think they stand to benefit from that. What we are aiming to do at this stage is we want to push out initiatives that would be easily implemented, that would be targeted at helping the various sectors of people, to help them when they・re in need and also to assist those vulnerable people in our community. This is what our intentions are. And as for the second half of the year, you would note that for the first quarter we are talking about a 7.8% decline but I・m forecasting for the whole year 5.5 to 6.5% decline. So in other words I see that the second half would be better, would be able to achieve better results than we do now, so that we can achieve a much lower decline when we get to the whole year. So we may be experiencing the worst period now, hopefully, if not for the second quarter, but the second half of the year we should be able to see better results.           

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

Ends/Friday, May 15, 2009
Issued at HKT 18:39


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