Hong Kong Pulls Out of Lengthy Recession

Hong Kong’s economy grew at an annual rate of 0.5% in the second quarter, pulling out of a severe and lengthy recession that brought record unemployment and sharply falling prices to the once-booming financial center. The government report of a modest rise in the territory’s gross domestic product, the inflation-adjusted measure of all goods and services produced for the three months ended June 30, surpassed expectations. Most economists had predicted the recession would persist with a decrease of an additional 1% to 2% in the quarter. Hong Kong’s economy had slipped into recession in early 1998, casting a shadow over the bustling territory in its first two years under Chinese sovereignty. The growth is another encouraging sign that Asia’s financial fortunes are turning around. However, in a move that could stifle any recovery, Hong Kong banks raised interest rates by a quarter-point late Friday, matching a move by the U.S. Federal Reserve.