Hong Kong slipped into recession in the third quarter as exports were hit by weakening global demand and consumption was hurt by a drop in asset prices and concern about the economic outlook.
The value of exports in the third quarter fell 1.3 percent from the previous quarter and analysts say a downturn for the trade sector will deepen as advanced economies continue to weaken next year.
Expected job losses in the trade, retail and property sectors in particular will push the unemployment rate up from 3.4 percent at present, curbing wage growth and deterring consumption, analysts say.
Private consumption expenditure, which excludes spending by tourists, rose only 0.3 percent in the third quarter from the previous quarter, as locals were hit by a 50 percent plunge in the stock market this year and as property prices have started to decline.
China will still provide some cushion for Hong Kong as mainland companies require financial services in the city and mainland Chinese are still flocking in to shop here.
However, China's economy is also slowing, clouding the outlook for Hong Kong where economists expect the economy to deteriorate further in the fourth quarter.
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