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Friday, 14 August 2009

Hong Kong exits recession

HONG KONG - HONG Kong pulled out of its deepest recession since the Asian financial crisis in the second quarter as GDP grew more than 2 per cent from the previous three months, a source familiar with the situation told Reuters on Friday.

The source would not clarify whether gross domestic product growth had hit or exceeded 3 per cent, but growth was well above analysts' forecasts for a 1.1 per cent expansion.

The government is due to announce second-quarter GDP data at 0830 GMT (4.30pm Singapore time) on Friday.

Hong Kong follows Singapore, which surged out of recession in the second quarter, and Germany and France, which both announced on Thursday that they had emerged from recession, raising hopes the global economy may be on the mend.

Still, some analysts say the road to recovery could be volatile. Recession is generally defined as two consecutive quarters of seasonally adjusted contraction in GDP.

Improving trade flows helped Hong Kong's economy in the second quarter, as China's economy picked up again, but the city economy remains weak compared with last year and analysts forecast that second-quarter GDP fell 5 per cent when compared with the year-ago period.

As a trading and financial hub, the territory has been hard hit by the global economic downturn and a year ago it slipped into its deepest recession since the Asian financial crisis in 1997/98.

In the first quarter of this year, GDP fell 4.3 per cent from the previous quarter, its worst performance since such records began in 1990 as exports nosedived and consumer spending was hurt by rising unemployment, which has now reached a near four-year high at 5.4 per cent. -- THOMSON REUTERS

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