Bank Expresses Concerns Over HK Economic Recovery

by Mary Swire, Tax-News.com, Hong Kong

29 January 2002

Hong Kong-based bank HSBC warned last week that the jurisdiction's economic recovery may lag behind its regional rivals due to weaknesses in corporate balance sheets and the government's shaky fiscal situation.

Speaking to the South China Morning Post on Thursday, HSBC's Chief Economist, Geoffrey Barker predicted that the US economy was unlikely to pull out of recession as quickly as had previously been thought, meaning that Asian economies would be forced to 'pull ourselves up by our own bootstraps'.

Mr Barker stated that although 2002 looks set to be a 'turnaround year' for the SAR, recovery is unlikely to be as spectacular as in some of the jurisdiction's Asian rivals, due to a greater reliance on US import demand.

This follows grave pronouncements made by both Financial Secretary Antony Leung Kam-chung, and SAR Chief Executive Tung Chee-hwa last week. Speaking at a media briefing in his election office, Mr Tung described the economic situation in Hong Kong as 'very serious', explaining that: 'It may take three, four, or five years for a return to a balance'.

However, the Chief Executive ruled out the possibility of new broad-based taxes such as sales taxes being introduced this year, deeming the idea to be a 'non-starter' while the economy is still weak.

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