HONG KONG: Hong Kong's economy is expected to have slowed further in the fourth quarter of last year, weighed down by weaker external demand, and could dip into recession this year, analysts said.
HSBC Holdings Plc forecast fourth-quarter growth of 3.3 percent, roughly in line with a 3 percent expectation from economists at the University of Hong Kong, and higher than the 1.5 percent projected by JP Morgan.
"Hong Kong escaped recession in 2011, but another dip into recession remains possible for 2012," HSBC said in a report.
Hong Kong Chief Executive Donald Tsang has said economic growth could shrink to as low as 2 percent in 2012 from 5 percent forecast for 2011.
Hong Kong's government will announce fourth-quarter and full-year GDP growth on Feb. 1.
On Thursday, the HSBC Purchasing Managers' Index survey showed business activity in the city edged up to a reading of 49.7 in December from 48.7 in November. A reading below 50 denotes contraction.
"Hong Kong's economy has come off the boil, but it's still simmering," said HSBC Greater China Economist Donna Kwok. "Overall demand strengthened in December, helping to offset continued softness in mainland manufacturing activity, with the headline PMI rising to a level just below 50."
"Headwinds from trade and financial channels will slow growth in early 2012, but provided Beijing's stimulus measures feed through, the city should strike a healthier balance between inflation and growth," she added.
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