Hong Kong could slip into a second recession in 2010, only months after appearing to emerge strongly from the global economic crisis, the territory's leader warned Tuesday.Donald Tsang, speaking in Beijing, said he was "rather pessimistic" and feared the former British colony could be hit by the second wave of a double-dip recession in the middle of 2010.
His remarks followed repeated warnings from Hong Kong government officials than an asset bubble of inflated property and stock prices may be developing in the wealthy city of 7 million. Hong Kong emerged from a year-long recession in the autumn and has seen stock market and property prices rise strongly in the second half of the year.
However, the mini-recovery has been fuelled to a large extent by money pouring in from China, which has inflated the prices of luxury properties disproportionately compared to lower-priced homes. Hong Kong's jobless rate remains above 5 per cent, compared to just 3 per cent before the first wave of the recession hit in 2008, as graduates struggle to find work.
Tsang warned of a return to recession in answer to questions at Beijing's National School of Administration, during the final day of a three-day duty visit to Beijing. But he insisted the government had sufficient resources to deal with "any unforeseeable developments" and would take steps to protect the most vulnerable sectors of society.
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