HK 'may face deep and lengthy downturn'
24-01-2009
The Monetary Authority has warned that Hong Kong's economy may face a deep and prolonged downturn. The Authority also stressed that it was ready to inject capital into local banks, if necessary. It said the local economy faced significant risks this year as the effects of the global financial crisis were still unfolding, with continuing uncertainty over the length and depth of the recession in major economies. In a submission to a Legislative Council panel for discussion next month, it said the deterioration in economic conditions may keep credit lines tight and restrain business spending, creating a vicious circle and making the downturn worse. It added that the performance of the weakening mainland economy would weigh on Hong Kong's growth prospects. It warned that most local banks would record substantial profit falls for last year. It said banks were expected to incur further impairment charges in relation to their securities investments, while income from fees and commissions would be lower as operating costs edged higher.
